Posted by Gurjit Srai In Bankruptcy March 9, 2022 0 Comment

 When you hit a financial wall, your only option for relief may be to file Chapter 7 bankruptcy. Filing for bankruptcy is generally not an easy decision for most people to make. However, when you ultimately make this decision, it is important to know what it is you are getting yourself into. One common question individuals have when they file bankruptcy is what can be forgiven under a Chapter 7.

How Does Chapter 7 Bankruptcy Work?

Before you get into what debts can and cannot be forgiven under Chapter 7 bankruptcy, you need to first understand how the process works. When you file for this type of bankruptcy, the court places and automatic temporary stay on your current debts. This prevents your creditors from collecting payments, garnishing wages, foreclosing on your home, repossessing property, and evicting you or even turning off your utilities.

The court will then assume legal possession of your assets and appoint a bankruptcy trustee to your case. The trustee is legally responsible to review your finances and oversee your Chapter 7 bankruptcy proceedings. The trustee will sell certain types of property (referred to as nonexempt property) to repay your creditors.

What Types of Property Is Nonexempt?

Each state sets its own rules regarding what type of property is exempt and the total value that you can exempt. Some states allow you to choose between their exemption list and the federal exemptions. However, most Chapter 7 bankruptcy cases are “no asset” cases. This means that all of your property is either exempt or there is a valid lien against the property.

Debts Forgiven Under Chapter 7 

A Chapter 7 bankruptcy filing will allow you to discharge certain types of unsecured debts, including but not limited to:

  • Credit card debt
  • Medical bills
  • Unsecured personal loans.

These unsecured debts will be discharged at the end of your bankruptcy proceeding, which can take typically four to six months.

It should be noted that just as you can discharge certain debts, there are also certain types of debts that CANNOT be discharged in a Chapter 7 bankruptcy, including:

  • Student loans
  • Child support or alimony payments
  • Majority of taxes you owe
  • Secured debts
  • Debts you don’t list on your Chapter 7 bankruptcy filing

If you are concerned about whether or not any of the debts you owe can or cannot be forgiven in your Chapter 7 bankruptcy proceeding, you should immediately consult with an experienced Central Valley bankruptcy attorney.

Call an Experienced Central Valley Bankruptcy Attorney

If you are considering Chapter 7 bankruptcy, it is in your best interest to consult with an experienced bankruptcy attorney to help you learn your legal rights and options, especially with respect to Chapter 7 bankruptcy.

For more information or to schedule a complimentary consultation with Central Valley bankruptcy attorney Gurjit Srai, please call 209-323-5558, or complete our online form.