As you begin to consider the pros and cons of Chapter 7 bankruptcy, you’ll likely enjoy the fact that you can discharge some of your debts. Discharging a debt means that it is wiped clean, and you don’t have to pay back those creditors in the future.
While this is the number one benefit of Chapter 7 bankruptcy, remember this: Not all types of debts are dischargeable. There are some that remain with you, even after your filing is complete:
- Most types of tax debt, such as federal taxes owed from past tax years
- Debts for obtaining money or assets through fraud or false financial statements
- Child support
- Debts for some types of penalties and fines
- Student loan debt
- Debts you did not list on your Chapter 7 bankruptcy forms
It’s easy to focus on the types of debts you can discharge through Chapter 7 bankruptcy, but don’t lose sight of those that will follow you even after the process is complete. If you assume that all your debts will be discharged, you may be disappointed.
As you decide if Chapter 7 bankruptcy is the right answer to your financial problems, do these things:
- Make a list of the pros and cons.
- Determine whether you meet the eligibility requirements.
- Understand what types of debts are and are not dischargeable.
If you take these steps, you can decide what to do next. If a Chapter 7 bankruptcy filing makes sense, it may be time to push forward. If there are other options available to help relieve your debt, you can consider those as well.