Chapter 7 Bankruptcy will discharge the following types of debt:
- Personal loans
- Credit cards
- Repossession deficiencies
- Auto accident claims
- Medical bills
- Judgments
- Business debts
- Leases
- Guaranties
- Negligence claims
- Tax penalties over 3 years old
- Income taxes that are not priority taxes
The following types of debt might be dischargeable:
- Willful and malicious injuries to others
- Embezzlement
- Debts incurred by fraud or dishonesty
- Debts arising from breach of fiduciary duty
*A creditor contesting the discharge of these debts must take prompt action to contest the discharge of his claim.
The following types of debt are not dischargeable under a Chapter 7 Bankruptcy:
- Recent taxes
- Trust fund taxes
- Child or family support
- Criminal fine or restitution
- Accident claims involving intoxication
- Debts not scheduled
- Penalties payable to the government other than tax penalties
- Student loans
- Debts listed in prior bankruptcy where debtor was denied a discharge
- Taxes for years where return unfiled or filed for less than 2 years
The aforementioned breakdown of the types of debts that are dischargeable under a Chapter 7 filing does not guarantee you will be able to do so. In order to qualify, you must fall below the median income on the “means test”. If you fall above the median income, you will need to look to a Chapter 13 Bankruptcy. For a complete discussion of the “means test” and the differences between a Chapter 7 and Chapter 13 bankruptcy, please see the Victoria Law Group’s FAQ section on Bankruptcy.