Which Debts Are Discharged In A Chapter 7 Bankruptcy?
by Veeti Lepisto
When you file for a Chapter 7 bankruptcy, many of your debts will be discharged by the court once the filing is complete. However, some debts will remain and you will still be responsible for them. If you are weighing whether or not filing for bankruptcy would be beneficial for you, it is important that you know which debts will and will not stand after the process is complete.
Student Loans
Student loans typically are not discharged in a bankruptcy filing. It is only if your financial and personal situation meet certain standards that you could potentially qualify for a discharge. To have your student loans discharged, you have to prove that paying back the loan would create an undue hardship and that you have made a reasonable effort to try and pay them in the past.
To request that your student loans are discharged, you need to file a formal request with the court. You will need to include evidence that shows the hardship the loans will cause. For instance, if you have an illness that limits your ability to work and you cannot afford the loans, you should include a statement from your treating physician and documents showing your income and expenses.
Medical Debt
High medical bills have forced many people to file for bankruptcy. In a Chapter 7 bankruptcy, medical bills are considered to be an unsecured debts. Unsecured debts do not have any collateral attached to them. As a result, it is very likely that your medical bills will be discharged by the court when your case is completed.
You do not have to take any special steps to ensure your medical bills are discharged. As long as you include them on your list of debts, they will be reviewed and discharged with your other eligible debts.
Retirement Plan Loan
It is not uncommon for people to take out loans from their retirement plans. If you did, you still are responsible for paying off the debt after the filing is complete. Retirement plan loans are viewed in the same light as other loans. You should contact the administrator of the retirement plan to work out a repayment plan so that your future credit ratings are not impacted by a poor repayment history.
Your bankruptcy attorney can help advise you on whether or not your other debts are dischargeable. The attorney can help ensure that you do not miss out on the full benefits of filing for bankruptcy.
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About Me
Several years ago, one of my best friends married the guy of her dreams. This tall, quiet man adored my friend. Almost every week during their courtship, he presented her with a beautiful, fragrant arrangement of flowers. At the time, my friend’s mom joked that her home resembled a funeral home because of all of the flowers her boyfriend sent her. After the happy pair married, they purchased a new home together and quickly began running out of money, meaning that he could no longer afford to give her the flowers she loved. They even discovered they couldn’t afford to pay the monthly mortgage. After only a few years of marriage, they filed for bankruptcy. On this blog, you will discover the ways a reputable bankruptcy attorney can help you successfully recover from financial ruin.