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The Curious Bag
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Before deciding whether a Chapter 7 bankruptcy is the appropriate option for you, understanding what debts are dischargeable in that type of bankruptcy is crucial. Not all debts can be discharged through a Chapter 7 bankruptcy case.
Function
The general purpose of a Chapter 7 bankruptcy is to obtain a discharge of as many of your debts as possible.
Considerations
Real estate, automobile and other consumer loans generally are dischargeable in a Chapter 7 bankruptcy. Student loan debt and past due taxes usually are not dischargeable.
Exception
There is an exception to the dischargeability of consumer debt. Due to changes in the U.S. Bankruptcy Code in 2005, a good deal of credit card debt no longer is subject to a Chapter 7 discharge.
Misconceptions
The most common misconception of bankruptcy discharge procedures is that all debt is liquidated and forgiven in a Chapter 7 case.
Warning
Because your ultimate objective in a Chapter 7 bankruptcy case is to be relieved of as much debt as possible. hiring a lawyer probably is in your best interests. An experienced bankruptcy lawyer is best able to advance your interests in such a case.
Source:
"The Glannon Guide to Bankruptcy: Guide to Bankruptcy;" Nathalie Martin; 2006
Cornell University Law School: Bankruptcy Overview
Cornell University Law School: U.S. Bankruptcy Code
More Information:
American Bar Association: Bankruptcy and Insolvency Litigation Committee
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