Which Debts can be Erased by Filing for Bankruptcy?

Bankruptcy can provide debtors with significant relief from the crushing weight of their debts. If you are facing medical debt, foreclosure or repossession, or mounting credit card or other debts, our Los Angeles bankruptcy lawyer can help you learn more about your options.

Not all bankruptcy petitions are appropriate for every person. A chapter 7 bankruptcy works by liquidating a person’s non-exempt assets to pay debts, and remaining debts are discharged, or eliminated. A Chapter 7 is an ideal choice for those whose income is too low or too irregular to pay their debts. Our lawyer can help you determine if you qualify for Chapter 7 by using the means test.

A chapter 13 bankruptcy creates a payment plan whereby an individual’s debts are paid off after three to five years and is a good choice for those who are earning a regular income. Both Chapter 7 and 13 bankruptcies allow for certain bankruptcy exemptions in order to protect certain assets, such as personal property or a percentage of equity in a home or vehicle.

Once the Chapter 13 or Chapter 7 personal bankruptcy process is complete, the debtor will receive a discharge of most unsecured debts, including:

• Credit cards
• Unsecured loans
• Medical bills
• Certain tax debts
• Debts for repossessed property

In order to be discharged, all debts must be listed in their entirety on your bankruptcy petition. Once debts have been discharged, creditors may not proceed with any collection actions against those debts.

Most unsecured debts will be discharged during a bankruptcy proceeding, but some may not be. Debts considered non-dischargeable include some tax debts, student loan obligations, and alimony or child support.

Bankruptcy can provide you with the opportunity you need for a financial fresh start. With a clean debt slate, you will be better able to rebuild your credit and your life. To learn more about the bankruptcy process or to schedule a consultation, contact our bankruptcy attorney in California today.

Source: Los Angeles Bankruptcy Attorney

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