When it comes to bankruptcy filings chapter 7 is the most common code of the bankruptcy laws that is used. This is due to the fact that a chapter 7 bankruptcy filing can eliminate unsecured debt that is owed and does not require an extensive time or a qualified repayment plan for the bankruptcy court. A chapter 7 case is normally completed within 6 months in most situation, while a chapter 13 bankruptcy case could take 3-5 years to complete. And requires regular payments towards the debts owed.
Chapter 7 bankruptcy has the ability to wipe out most if not all of the unsecured debt that you owe, but the type of debt is an important consideration. Under a chapter 7 bankruptcy credit card bills, medical debt, and most other types of unsecured debt can be discharged without any problems or issues, but there are some debts that are not dischargeable under the current bankruptcy laws. These debts are unsecured, but the current bankruptcy laws in place do not allow these specific unsecured debt types to be discharged using a chapter 7 bankruptcy.
Some of the most common types of debt that are unsecured but that can not legally be discharged using chapter 7 bankruptcy can include student loans that are owed, any back and current child support, and any alimony or spousal support that a family court judge has ordered. Since both spousal support and child support are considered by the bankruptcy laws to be priority debts these amounts can not be discharged by the bankruptcy court.
Student loans are also very difficult if not impossible to discharge by filing for chapter 7 bankruptcy. These loans are not covered by discharge under the current bankruptcy statutes, and it is very difficult to get this type of unsecured debt discharged in most cases. Filing for chapter 7 bankruptcy is you have child support debt, alimony debt, or student loan debt may still be the best option though, because other unsecured debts can be eliminated and this may free up financial resources so that you can pay the priority debts instead.
Tax debt is another area where a bankruptcy discharge may not be possible, but the myth that tax debt is never eligible for discharge under bankruptcy is not true. Tax debt is classified as unsecured debt, and there are certain requirements and restrictions concerning when this type of debt can be discharged in a chapter 7 bankruptcy case. The tax debt that you owe must be a minimum of 3 years in the past, and the taxes must have been assessed by the Internal Revenue Service. In addition the tax return and all relevant documents must have to be on file with the IRS for this debt to qualify for a discharge.
Any debt that is related to any type of fraudulent activity on your part will not usually be discharged, even if the unsecured debt type is eligible for a discharge. This includes debts that are related to bad checks, fraudulent information on credit applications, and other cases where your intent was to defraud a creditor or receive goods or services that you had no intention of paying when these were ordered or received.
If you are unsure on whether a chapter 7 bankruptcy can help eliminate your unsecured debts then youi should consult an experienced bankruptcy attorney immediately. This legal specialist can examine all of the factors in your case and explain which unsecured debts owed can be eliminated by taking this step and filing for chapter 7 bankruptcy protection.