Michael J. Logan, Ltd.

What debts can you eliminate with Chapter 7 bankruptcy?

Is your debt building up and getting unmanageable? If so, you might be considering all your options, including chapter 7 bankruptcy. Filing for bankruptcy is an important life decision that impacts your finances significantly. Due to the weight of this issue, you should understand exactly what chapter 7 bankruptcy can do for you.

If you meet eligibility requirements, you can eliminate most unsecured debts. In certain cases, you can eliminate secured debts. Keep reading for more information about dischargeable debts.

Unsecured debts

Chapter 7 bankruptcy will help you eliminate consumer debts such as:

  • Medical bills
  • Credit card charges
  • Utility bills
  • Government benefit overpayments
  • Personal loans
  • Past due rent

However, if any of the property, money or services involved with these debts was procured through misconduct or fraud, they may be non-dischargeable.

Secured debts

If you surrender property related to your secured debts, you can discharge them through chapter 7 bankruptcy. The most common secured debts include car payments and mortgages. If you do not want or need any secured property, you might want to consider giving it back to the creditor during the bankruptcy process.

How a discharge works

When you discharge a debt, you are free from personal liability for that debt. It also prevents the creditor from taking collection actions against you. If a creditor has a valid lien that is still enforceable, however, you may still need to surrender the property in question. In most cases, you can expect to receive a discharge four months after filing for chapter 7 bankruptcy.

Sometimes liquidating your debts is the best option when you reach a certain point of financial turmoil. Eliminating debts can be the best way for you to start over. Now that you know more about chapter 7 bankruptcy thanks to information from the United States Courts, you can decide if this is the right path for you.


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