Many people think that filing for Chapter 7 bankruptcy can discharge all their debts and be 100% free of debt. Although this type of bankruptcy can discharge most of your debts, it cannot eliminate all of them. There are some debts you can’t discharge. And if you have too many debts that cannot be discharged, filing for Chapter 7 bankruptcy may not be a good idea.
But, if most of your debts cannot be discharged, you still have some options. You can file Chapter 13 instead, so you can pay down your debts and still get relief from your creditors. This type of bankruptcy might be a better option, so your credit history will not record a full discharge.
What Debts You Can and Cannot Discharge
When you file for Chapter 7 bankruptcy, expect serious scrutiny from the courts. These courts want to ensure you are not financially capable of paying off those debts before letting you discharge certain debts. Also, they want to ensure you won’t discharge debts that will affect others. These debts include child support payments, taxes, and federal student loans.
Typically, you can discharge debts such as outstanding medical debt, promissory notes, private loans, credit card debt, lawsuit judgments with liens, as well as leases and contracts under Chapter 7 and Chapter 13. If you only file for Chapter 7, you cannot discharge divorce settlements or agreement debts like alimony or child support, tax debts, HOA fees, court fees or fines, and retirement plan loans. But, you can still file for Chapter 13 to apply for repayment.
Newly acquired debts not included in your initial filing can’t be discharged. Moreover, when you still accumulate debt even if you have filed for bankruptcy, your petition may be denied by the court and you can be charged with fraud.
Know First If You Qualify for Chapter 7 Bankruptcy
Before you calculate the debts you can discharge and which you can’t, you should see a bankruptcy attorney Charleston, WV and know if you are qualified for Chapter 7 in the first place. Just because you lived beyond your means does not automatically qualify you for Chapter 7. And if you have filed before, you may not be able to file again for a while.
Bankruptcy courts will consider your income compared to the incomes of other people in your area, together with your disposable income and debts. You will only qualify for Chapter 7 if the courts find you not capable of paying off your debts.