Written by Dan Marshall
A sluggish economy and mounting debt level have made repayment of loans a back-breaking task for the debtors. Debtors often go through dire financial straits when faced with unforeseen circumstances like undergoing hospital treatment or suffering the upshots of a job loss. There are many debt relief options that can bail you out of such fiscal odds like debt management plans, debt settlement options and bankruptcy. Most consumers file Chapter 7 bankruptcy as it provides them a fresh new opportunity to start afresh since a lion's share of the unsecured debt burden of the debtor is wiped off. If you're reading the concerns of this article, chances are high that you must be going through such tough economic situations that are forcing you to file Chapter 7 bankruptcy. Read on the concerns of this article to know more on the process.
Discharge of debts - What it is and how it works
A discharge absolves the debtor from his personal liability for the debt and also prohibits the creditors from taking any collection actions against the debtor. The debtor won't be required to legally pay off any debt that is discharged. Although a debtor isn't liable for the discharged debts, if there is a valid lien which has been neglected in the process might remain. After filing a Chapter 7, the filer automatically gets a discharge by the end of the case. The court grants the discharge 60 days after the 341(a) meeting with the creditors and this implies that just after 4 months from filing your bankruptcy petition will you be discharged from all your debts.
Which debts are dischargeable in Chapter 7 bankruptcy?
Now you must be wondering about the debts, whether or not you can include them in bankruptcy. If you don't have extraordinary circumstances, majority of your debts will be discharged through Chapter 7 bankruptcy. Here is a list of all the dischargeable debts.
- Medical bills
- Collection agency accounts
- Credit card debt
- Utility bills
- Student loans (only in rare situations)
- Personal loans from family and friends
- Dishonored checks
- Business debts
- Auto accident claims
- Social Security overpayments and many more
The above mentioned are not the only debts that are discharged in Chapter 7 bankruptcy; there are some others too.
Which debts can't be wiped out through Chapter 7 bankruptcy?
Although the purpose of Chapter 7 bankruptcy is to wipe out your debts, there are some debts that just can't be erased through this kind. Here is a list of the debts that can't be discharged through bankruptcy.
- Certain types of tax debts
- Debts that are accrued to pay taxes which aren't dischargeable
- Debts that aren't listed on the documents filed with the court
- Debts owed to the government
- Divorce and property settlement agreements
- Child support debts
- Criminal fines and some other penalties.
What are the most common benefits of filing Chapter 7 bankruptcy?
For most people who are planning to file Chapter 7, the benefits are many. Here are some actual benefits of the process.
- This is a much shorter process than Chapter 13
- On most unsecured debts, there's no pay back-break
- You might even keep your assets and pay back debt
- Your future income won't be harmed due to bankruptcy
- The legal fees of Chapter 7 bankruptcy are less.
So, after considering all the above mentioned points on bankruptcy, if you still feel that this is the best debt relief option for you, file bankruptcy with the help of an attorney. Immediately after, start repairing your credit score.
Dan Marshall work for different online financial communities. At present, he is associated with OVLG and loves writing on different topics, especially the ones that would be of some help to others. Visit OVLGroup's facebook page for a discussion and to get more information on debt and bankruptcy issues.