What Debts Does Chapter 7 Bankruptcy Cancel?
I. Debts that are commonly discharged (or canceled) in Chapter 7 Bankruptcy:
The following obligations (as well as others, not listed!) are typically forgiven in chapter 7 bankruptcy:
- Credit Cards
- Medical bills
- Personal loans (including pay day loans) and business loans
- Civil judgments
- Vehicle loan deficiencies (the debt remaining after repossession)
- Mortgage liability after foreclosure
- Secured debts (e.g. mortgages and car loans) are discharged, but you still have to pay them off in order to retain the collateral (the home or vehicle)
- Income taxes (sometimes)
Struggling with a debt that doesn’t fit neatly into an above-category? Simply contact us for further information.
A caveat: debts that would otherwise be dischargeable (subject to cancellation) may be excluded from discharge if one conceals assets, commits fraud or otherwise fails to comply with the requirements of bankruptcy law….
Which is where yours truly fits in. The bankruptcy path is beset by obstacles. We anticipate its pitfalls and carefully craft your case to ensure you can cancel the maximum amount of debt allowed.
II. Debts that are NOT discharged (or canceled) in Chapter 7 Bankruptcy:
The following are some of the categories of debt that are excepted (excluded) from discharge in chapter 7 bankruptcy:
- Student loans (with very rare exception)
- Domestic support (child support or alimony)
- Debts to society for certain fines and criminal acts (such as DUI)
- Taxes… except: you can discharge income taxes that last became due (based on the extension date) more than 3 years ago, were filed more than 2 years before filing bankruptcy and not assessed within 240 days before filing bankruptcy.
Other kooky considerations can apply to canceling taxes. E.g., the 240-day wait period may be longer (i.e. it’s tolled) pursuant to intervening events like a prior bankruptcy filing or a pending offer in compromise with the taxing authorities.
Determining tax dischargeability (terrible word, I know) is case specific. On matters pertaining to cancellation or discharge of debt in chapter 7 bankruptcy, be sure to meet with your friendly-neighborhood San Diego bankruptcy lawyer.