Chapter 7 bankruptcy eliminates the majority of debt through asset liquidation. A trustee will be appointed by a court to oversee your case and take ownership of your assets, sell them, and distribute the proceeds to your creditors. Filing for Chapter 7 bankruptcy protection is a significant step toward achieving financial freedom. But, because you cannot discharge all debts in your filing, you should know what you can include. Also, keep in mind that the creditor can still collect on a discharged debt from a co-debtor if somebody signed on a loan or debt with you and did not file for bankruptcy. 

Meaning of “Discharge” in Chapter 7 Bankruptcy

In Chapter 7, the word “discharge” means releasing you from all financial obligations to a creditor. After the debt has been discharged by the court, the creditor cannot legally seek collection. If you decide to file for Chapter 7, you get the discharge at the end of your case, which can take a few months. Before you can complete the case, you will have to take courses, meet with your creditors, and file the correct information. 

Which Debts a Chapter 7 Filing Can Discharge

Although a Chapter 7 filing can discharge many types of debts, the timing of these debts also matters. Debts incurred before filing for bankruptcy may qualify for Chapter 7 discharge. Debts incurred after your filing or those you didn’t include on your petition to file won’t be discharged. In Chapter7, you can discharge debts such as credit card debts, debts that have gone to third-party collection agencies, personal loans, medical bills, utilities, lease agreement debts, dishonored checks, civil court and other judgments, revolving charge accounts, and others. Meanwhile, you cannot discharge debts such as alimony, child support, taxes, and debts from fraud or death and injury from intoxicated driving in this filing. 

Why Work with a Bankruptcy Attorney

If you are overwhelmed with monthly debt payments and you can’t make those payments with your income anymore, you might qualify for Chapter 7 bankruptcy. But, this type of bankruptcy has strict qualifications, so you need to meet with a bankruptcy lawyer before you assume that you are qualified. You will have to receive credit counseling, pass the means test, and attend the meeting of creditors. Your lawyer will evaluate your existing debts and help determine if you qualify for Chapter 7. If you do, they will start the process, including filing the necessary paperwork and guiding you through every step you should complete.