Chapter 7 Bankruptcy: What Debts Can You Discharge?
Chapter 7 bankruptcy is a common type of personal bankruptcy since it allows you to discharge many of your debts. They will no longer be your responsibility, and you won't have any more hassling phone calls from your creditors. However, not all debts you have can be discharged. Here are some common debts you will be able to get rid of if you file for chapter 7.
Bills That Are in Collections
The first category of bills that you might be able to discharge through chapter 7 bankruptcy include bills that are in collections. This includes basic bills like for your cable or Internet, other utilities, your cell phone, and store credit cards. Many of these bills end up on your credit report and in collections if you don't pay them after a certain period of time. The creditors will contact you on a daily basis, which can be a hassle. They might even call your work or family members if they can get their number. Filing for bankruptcy puts a stop to most of these calls.
Car Accident Claims
A debt you might not be aware of discharging is a claim from a car accident. For example, if you were at fault for a vehicle collision and the other driver sued you for damages, the legal fees or medical fees might be discharged. This will depend on a number of factors, including how much you owe and the situation involving the accident. One of the bigger exceptions is if you were intoxicated when you caused the accident, in which case the judge will likely deny you the ability to discharge this type of debt.
Credit Card Advances and Charges
One of your biggest debts probably has to do with your credit cards. Most credit card debt can be discharged if you are approved for chapter 7 bankruptcy. The first type of credit card debt to discharge is when you received a cash advance from your credit card. It must be one that was requested prior to filing for bankruptcy, and be over a certain amount. If you had a small sum that was requested shortly before filing, it might not be discharged. This also only pertains to personal cash advances, not if it was used for business purposes.
The other type of debt you should be able to discharge is past-due credit card bills. It is easy to start racking up debt when you can't pay your bills. Credit card bills tend to be put aside when you need to pay your rent and buy groceries first. A good amount of credit card debt can be discharged, though it might depend what the credit card was used for. If it was used for buying groceries or clothing that was necessary for your family, that should be discharged. However, luxury expenses might not be.
If you have any more questions about filing for chapter 7 bankruptcy, speak to an attorney like Wiesner & Frackowiak, LC.