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What debts are dischargeable under Chapter 7 bankruptcy?

When considering filing for Chapter 7 bankruptcy, it is crucial to understand which debts are dischargeable. This knowledge may help you make informed decisions about your financial future.

Below are common types of dischargeable debts and what you should know about them.

Common dischargeable debts

Dischargeable debt is a type of debt that bankruptcy can eliminate. Under Chapter 7, it may include the following:

Credit card debt

Credit card balances, including personal and business credit cards, are typically dischargeable in Chapter 7 bankruptcy. However, recent large purchases or cash advances may be subject to scrutiny.

Medical bills

If you are struggling with overwhelming medical debt, Chapter 7 bankruptcy might offer relief. Most medical bills could be dischargeable, regardless of their amount.

Personal loans

Unsecured personal loans, including those from friends and family, are generally dischargeable. However, this may strain personal relationships, so consider discussing your intentions with loved ones beforehand.

Utility bills

Past-due utility bills may often be dischargeable in Chapter 7 bankruptcy. This may include electricity, water, gas and phone bills. However, you may need to pay a deposit to maintain services after bankruptcy.

You may want to seek legal advice to clarify which debts you can discharge with bankruptcy and those you cannot.

Other debts may not be dischargeable

While many debts could be dischargeable, it is essential to note that not all debts may qualify. Student loans, most tax debts and child support obligations are typically non-dischargeable. Additionally, secured debts such as mortgages and car loans may require you to surrender the property if you cannot keep up with payments.

Before filing for bankruptcy, you may want to consult with an attorney. They could provide personalized guidance based on your specific financial situation and help you understand the potential consequences of bankruptcy. If you decide to file for Chapter 7 bankruptcy, understanding which debts you could discharge may help you make the most of this fresh financial start.

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