Which debts are discharged during Chapter 7?

On Behalf of | Mar 8, 2021 | Chapter 7 Bankruptcy |

If you’re struggling with debt in North Carolina, filing for Chapter 7 bankruptcy can help you get rid of your debts once and for all. You can discharge most of your debts when you file for bankruptcy, although you might have to sell some of your assets to pay them off. However, a few debts might stick with you after you’ve finalized your bankruptcy.

Which debts can you discharge during bankruptcy?

You can discharge most of your unsecured debts when you file for Chapter 7 bankruptcy. This includes credit card debt, car payments, utility bills, phone bills, bank loans and medical bills. There are some exceptions, but a bankruptcy attorney can explain the process.

You might not be able to discharge a few debts depending on your situation. Student loan debt is difficult to discharge, but you might qualify if you can prove that you’ve experienced financial hardship that made it impossible to pay it off. In some cases, you might be able to discharge your back taxes if they are at least three years old.

Generally, you can’t discharge more recent back taxes. You also can’t discharge child support payments, spousal support payments, court fees, legal fees and fines that a judge ordered you to pay after you committed a crime. When you file for bankruptcy, your creditors might challenge the ruling and claim that your debts shouldn’t be discharged. If they’re successful, you might still have to pay some of your debts.

How do you file for Chapter 7?

Not everyone can file for Chapter 7 bankruptcy. You’ll have to pay the fees, take the means test and prove to the court that you can’t keep up your debts without filing for bankruptcy. If you fail any part of this process, you might not be eligible.

Fortunately, an attorney could help you through the process from the beginning. If Chapter 7 doesn’t work for you, they could suggest filing for Chapter 13. They could also help you protect yourself from predatory creditors who will try to seize your assets during this time.