Chapter 7 bankruptcy is the most common chapter filed because of its ability to wipe out unsecured debt. Filing Chapter 7 may help eliminate most types of unsecured debt but it often depends on the type of debt. Common debts that are wiped out in Chapter 7 include medical bills and credit card debt .
There are unsecured debts that are considered non-dischargeable in Chapter 7 bankruptcy; meaning they cannot be wipe out or eliminated. Non-dischargeable debt in Chapter 7 includes back child support, alimony or spousal support and student loan debt . Student loan debt is often difficult to discharge under specific circumstances. Child support and alimony are considered priority debts. Filing bankruptcy may help you discharge other unsecured debt in order for you to make support payments easier.
Tax debt is another unsecured debt that often doesn’t qualify for discharge in Chapter 7 unless certain requirements are met. For tax debt it has to be at least 3 years old, assessed by the Internal Revenue Service (IRS) and all tax documents for years in question would have to be filed. If you have debt related to fraud, such as writing bad checks or providing false information on a credit application, it may not qualify for discharge under Chapter 7.
Chapter 7 bankruptcy can be a powerful tool to help debtors gain control of their finances. It is important to review eligibility requirements and qualifications. Questions and concerns about outstanding debt obligations should be reviewed with a qualified bankruptcy attorney.