What debts are dischargeable in a Chapter 7 bankruptcy?

Like many people in the state of Tennessee, you may have considered declaring Chapter 7 bankruptcy. Through this option, a number of your debts may be discharged, which can help you to regain control of your finances. At Rothschild & Ausbrooks, PLLC, we are often asked about how debts are handled in Chapter 7 bankruptcies. In this post, we will discuss which debts may be discharged in this type of filing.

After filing for Chapter 7 bankruptcy, some of your debts may be paid using the proceeds from your liquidated non-exempt assets. Other debts may be discharged. According to the U.S. Courts, you are released from your personal liability for such debts through a bankruptcy discharge. This means that you are no longer responsible for paying these debts.

Only certain types of debts are eligible for discharge through your Chapter 7 bankruptcy filing. Some of the most common dischargeable debts include the following:

  •        Credit card balances and revolving charge accounts
  •        Medical bills
  •        Civil court balances
  •        Utility bills
  •        Personal loans from employers, friends or family members
  •        Collection agency accounts

However, these, and other dischargeable debts, may become non-dischargeable if they are connected to any type of fraud or misconduct.

The U.S. Bankruptcy code specifies the types of debts that are not eligible for discharge. Debts owed to government agencies for penalties and fines cannot be discharged through a Chapter 7 bankruptcy filing. Additionally, debts arising out of a separation or divorce that are owed to children or former spouses, as well as child support, alimony and spousal support debts are also non-dischargeable. With few exceptions, student loans are also unable to be discharged.

For more information on secured and unsecured debts, please visit our what debt can you discharge page. 

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