One of the most important aspects of Chapter 7 bankruptcy is its ability to discharge debt, or release a debtor from responsibility for paying it. While many important categories of debt are dischargeable, not all obligations can be eliminated in bankruptcy
Generally, all debts that are considered unsecured—that it, all debts that are not backed by collateral—are dischargeable in bankruptcy. Examples include:
Credit card debts. When facing financial hard times, many people turn to credit cards to help their pay their bills. Chapter 7 bankruptcy will discharge credit card bills, with one limited exception: if the bankruptcy filer ran up large amounts of unnecessary debt in the recent past before filing bankruptcy, that debt may be considered fraudulent and will not be discharged.
Medical bills. Americans who face large medical bills because of chronic or catastrophic illness can usually have the debt discharged through Chapter 7 bankruptcy.
Most civil court judgments. Unless based on fraud or related to driving under the influence, almost all civil court judgments can be discharged in bankruptcy.
There are several important categories of financial obligations that a debtor must pay even after bankruptcy. These include:
Taxes. Any taxes owed from the last three years will still have to be paid; older amounts may be dischargeable.
Student loans. Student loans cannot be discharged in bankruptcy, no matter their amount. For many young people, this means that the majority of their debt burden is nondischargeable.
Child support and alimony. Any amounts owed for the support of children or a former spouse will not be erased in bankruptcy.
Debts not listed on bankruptcy paperwork. Any debts that a filer does not list on his bankruptcy paperwork will not be discharged, so it is in his best interest to list all obligations.
If your bills have become too much to deal with, count on Golden State Law Group to help you file bankruptcy. To schedule an appointment in our San Diego office, call (619) 234-3333 today. Our attorneys are highly rated by the Better Business Bureau, and we offer convenient payment plans.