The vast majority of debts can be discharged under chapter 7 bankruptcy, including credit card debt, medical debt, and past-due utility bills. Particularly under chapter 7, debtors who have filed for bankruptcy honestly and in good faith can get the majority of their debt erased. Some debts that cannot be discharged in chapter 7 bankruptcy are student loans, spousal alimony, child support, debts owed to the government as fines, and debts incurred from intoxicated driving. Besides these, any debts that the court deems fraudulent or in bad faith are unlikely to be discharged. Creditors may object to certain debts being discharged, but the court has the final say. Your chapter 7 bankruptcy will discharge your debts around 60 days after the 341(a) meeting of creditors. Typically, this means that the court will discharge your debts about four months after you first file. Barring any bad faith claims on your paperwork, chapter 7 cases tend to move quickly. A discharge in bankruptcy means that you will be off the hook for paying the covered debts. Not all debts can be discharged under chapter 7, but many of the most common forms of debt can. Credit card debt and medical bills are dischargeable, for example.What Cannot Be Discharged in Chapter 7 Bankruptcy?
When Will My Chapter 7 Bankruptcy Be Discharged?
What Is a Discharged Bankruptcy Chapter 7?
What Debts Are Discharged in Chapter 7 Bankruptcy? FAQs
In a Chapter 7 bankruptcy, individuals may have their unsecured debt, such as credit card and medical bills, discharged and no longer be liable to repay them. Other types of dischargeable debt include most personal loans and certain taxes that meet certain criteria.
Secured debts, such as mortgage or car loan payments, are not automatically discharged in Chapter 7 bankruptcies and the debtor may still be responsible for repaying them depending on individual circumstances.
Generally, student loans are not dischargeable in Chapter 7 bankruptcy unless the debtor can prove that repayment of the loans would cause undue hardship.
Certain types of taxes may be eligible for discharge if certain criteria are met, such as if the taxes are more than three years old and not related to fraud or failure to file a return.
A Chapter 7 bankruptcy generally stays on your credit report for up to 10 years from the date it is filed. However, this period may vary depending on individual circumstances and other factors.
True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.
True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.
To learn more about True, visit his personal website, view his author profile on Amazon, or check out his speaker profile on the CFA Institute website.