A lot of consumers think that they can discharge all debts and be 100% debt-free if they file for Chapter 7 bankruptcy. Although you could discharge most of your debts, you cannot be 100% debt-free after you file. And if you have too many non-dischargeable debts, Chapter 7 may not be your best option. Instead. you can file for Chapter 13 which lets you pay down these debts and still get relief from creditors. This can help you avoid a full discharge on your credit history. A reputable local chapter 7 bankruptcy law firm has attorneys who can help you understand your options.

Which Debts You Can and Cannot Discharge

When you file for Chapter 7 bankruptcy, the courts will ensure you don’t have the financial means to pay off your debts before letting your discharge. But, they will also ensure you are not discharging debts that impact others including child support payments, student loans, or taxes.

Typically, you can discharge an outstanding medical debt, private loans, credit card debts, promissory notes, lawsuit judgments with lens, as well as leases and contracts in Chapter 7 and Chapter 13. But divorce settlements, debts for taxes, HOA fees, child support, court fees or fines, loans from retirement plans, and debts that were part of a previous bankruptcy cannot be discharged when you file for Chapter 7 bankruptcy.

Know If You Qualify for Chapter 7 Bankruptcy

Before you calculate what debts qualify for discharge and which don’t, you should meet with a lawyer to know if your financial situation qualifies you for discharge. Keep in mind that the court will look at your income compared to other incomes in your area, together with your debts and disposable income. If you have amassed debts because of poor spending choices and not because you can’t pay off your debts, you may not qualify for Chapter 7.

If you have a high income or too many debts that Chapter 7 can’t discharge, you can file for Chapter 13 bankruptcy. In this option, you develop a repayment plan with your lawyer and propose the repayment plan to the court. Before the court will approve or reject your proposal, they will consider the adequacy of the plan, and listen to the objections from creditors. If the court approves it, you should make payments. Often, a Chapter 13 repayment plan takes 3-5 years, depending on the total amount of debt and the payment amounts.