Chapter 7 Bankruptcy: Which Debts Can Be Discharged?

Chapter 7 bankruptcy allows you to discharge some of your debts and ease your financial burden. Not all debts are eligible for inclusion in a Chapter 7 bankruptcy. Most unsecured debts, however, can be discharged in full within 90 days.

Credit Card Debt

Credit card debt is one of the most common debts individuals seek relief from under Chapter 7 bankruptcy. You can successfully discharge your outstanding credit card debt, provided you have not made purchases within the 30 days prior to filing your bankruptcy petition. A credit card company may contest the discharge of any debts you incurred immediately prior to filing for bankruptcy.

Medical Debt

If an injury or unexpected illness left you with substantial medical bills you cannot afford to pay, Chapter 7 bankruptcy can help you dispose of the debt. All medical debts can be discharged through Chapter 7 bankruptcy regardless of the amount you owe.

Secured Loan Deficiencies

A secured loan deficiency is the amount you still owe after a lender seizes your collateral. If, for example, you lost your home to foreclosure but the property was worth less than the balance you still owed your lender, the difference between the value of the property and your loan debt is the deficiency. A lender has the legal right to pursue you for a loan deficiency even after recovering the collateral. Chapter 7 bankruptcy can discharge the debt and absolve your obligation to repay any secured loan deficiencies.