Will Chapter 7 Bankruptcy Erase All of the Debt I Owe?

If you are planning to file for Chapter 7 bankruptcy, you want to be certain that all—or at least the majority of—the major debts you owe will be discharged in your bankruptcy case. Accordingly, you might be wondering: will Chapter 7 bankruptcy erase all of the debt I owe? To confirm an answer to this question, it is critical to discuss the particular facts of your case with an Oak Park consumer bankruptcy lawyer who can help. Bankruptcy laws in the U.S. are extremely complicated, and there are some types of debt that are not dischargeable. As such, it is important to have an experienced attorney assess your situation before you move forward with your bankruptcy case.

The good news is that most consumer debts are dischargeable in a Chapter 7 bankruptcy case, which means that you may indeed be able to erase all of the debt you owe. Yet some types of debt are not dischargeable, and there are some situations in which debt ultimately cannot be discharged even if the type of debt is dischargeable under the U.S. Bankruptcy Code. Here is what you need to know.

Most Consumer Debts are Dischargeable

First, you should know that most types of debts that consumers seek to discharge in Chapter 7 bankruptcy cases can be discharged, including but not limited to:
  • Medical debt;
  • Credit card debt;
  • Mortgage debt;
  • Motor vehicle loan debt; and
  • Student loan debt in some circumstances.
For the types of secured debt mentioned above, you should know that bankruptcy will not release the lien, but debt you owe can be discharged.

Some Types of Debts Cannot be Discharged

While many types of common consumer debt can be erased in a Chapter 7 bankruptcy case, there are simply some types of debt that cannot be discharged for public policy reasons. If you have any of the following types of debt, you should not expect for them to be discharged or erased in a bankruptcy case:
  • Debt you owe for any family support, including child support or spousal maintenance;
  • Attorney’s fees related to child support or other family support collections;
  • Court penalties or fines;
  • Penalties you owe to government agencies;
  • Criminal restitution you owe as a result of a criminal conviction or plea;
  • Most types of tax debt; and
  • Debt you owe from a personal injury judgment arising out of an intoxicated driving accident in which you were at fault.
Generally speaking, you can only be eligible to discharge income tax debt, but there are specific rules that apply. The debt must be for specific federal or state income taxes, and that tax debt must be owed from a return that is at least three years old. If you have significant tax debt, you should discuss it in detail with an attorney since discharging income tax debt is complex. And you should never assume that your income tax debt can be discharged until you speak with a lawyer.

In addition, you should know that any debts you do not list or declare in your bankruptcy petition cannot be discharged.

Sometimes Creditors Can Successfully Object to a Discharge

If a creditor successfully objects to discharging a particular debt, that debt cannot be discharged (even if it is a type of debt that can be discharged under U.S. bankruptcy law). This situation is uncommon, but you should speak with a bankruptcy lawyer about it.

Contact an Oak Park Bankruptcy Attorney Today

If you have questions about whether your debts are dischargeable, or if you simply need assistance with your Chapter 7 case, our Oak Park bankruptcy lawyers are here to help. Contact the Emerson Law Firm today.



See Related Blog Posts:

Bankruptcy Surge More Likely to Occur in 2022

Consumer Bankruptcy Should Not be Stigmatized

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