Discharged Debts In Chapter 7 Bankruptcy
Upon filing for Chapter 7 bankruptcy, you are not required to directly make a payment for any portion of your debts. The trustee will split any of your non-exempt assets among your creditors, and the remainder of the debt will be discharged by the court. Filing for Chapter 7 bankruptcy is a mechanism that provides individuals a fresh start. Seek assistance from a qualified bankruptcy attorney to ascertain whether your scenario fits the requirements of filing for Chapter 7.
Types of dischargeable and not dischargeable debts under Chapter 7
Bankruptcy provides a means for individuals with outstanding medical bills and credit card debt to relieve themselves from the obligation to make a payment. Although a winner of a civil lawsuit judgment can garnish your wages or place a lien on your home, judgments can generally be discharged. In addition, the following types of debts are also dischargeable under 11 U.S.C. §727:
- Duties under leases and contracts
- Promissory notes and personal loans
- Debts due to co-borrowers, unless the co-borrower is your spouse and the obligation is memorialized in a separation or divorce agreement
In contrast, under 11 U.S.C. §523, there are particular debts in which Chapter 7 bankruptcy does not discharge. One example of such a debt includes child support, alimony and any debt dealing with alimony, maintenance, or support. To be distinguished as non-dischargeable, a domestic support obligation must be provided in:
- Court order authorizing support obligations
- Child support enforcement agency determination of support obligations
- Divorce decree
- Separation agreement
Experienced New York consumer bankruptcy lawyers can help determine whether a debt may be discharged in a Chapter 7 bankruptcy.