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Debts that can be discharged in Chapter 7 bankruptcy

On Behalf of | Nov 14, 2021 | bankruptcy |

Chapter 7 bankruptcy can provide relief for some Maryland residents who have overwhelming consumer debt and no means to pay it off. While Chapter 7 bankruptcy can have a negative impact on your credit score, it is sometimes a better option than letting debts go into collections.

What debts can be included in Chapter 7?

Most unsecured consumer debts can be discharged in Chapter 7. Credit card debts, personal loans and medical bills usually qualify. Some of the debts that usually aren’t discharged in Chapter 7 bankruptcy include:

  • Student loans
  • Child support
  • Court fees
  • Tax debt
  • Debt from lawsuits filed against you

Along with unsecured consumer debts, there are some secured loans that can also be discharged in a Chapter 7 case. However, any of your creditors have the option of objecting to your bankruptcy filing and petitioning the court to make you repay some of your debt. This usually only happens if there have been excessive charges for luxury goods right before the bankruptcy filing.

Chapter 7 is a liquidation

Chapter 7 is called liquidation bankruptcy because the trustee will sell certain of your assets and use the proceeds to repay creditors. This doesn’t mean that you will have to get rid of everything, though, since a lot of your personal property can be exempted from the process. It is important to bear in mind that both Maryland and the federal government provide a list of exempt assets, and in some cases they may differ.

You can double exemptions if you file jointly

A married couple that files for Chapter 7 bankruptcy together can exempt more property from liquidation. This may be a good option for couples that have shared debts and a lot of property that they don’t want to lose.



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