Chapter 7 Bankruptcy Guide: Understanding Discharges and How they Can Help

You can refinance your debt to get it under control or even get on a more affordable payment plan, but most people will agree that all they really want to do is get rid of the debt forever. They wish they could just wave a magic wand and make it go away. In some ways, filing for Chapter 7 bankruptcy is like waving a magic wand since it can make debt go away in the right circumstances.

You’ll need to talk with a Mesa Chapter 7 bankruptcy attorney to find out if you qualify and to learn the ins and outs. Here’s a little bit more information to give you an overview:


What Debts are Discharged?

Most people who are looking into Chapter 7 bankruptcy are most interested in finding out what kinds of debts they can discharge and how much. The short answer – and the goods news – is: A lot.

Chapter 7 bankruptcy discharges unsecured debts once your assets are liquidated to pay what you can. Unsecured debts include things like credit cards, medical debt, and personal loans. The bankruptcy will typically discharge whatever is owed. So if you owe your credit cards $50,000, the bankruptcy will discharge all $50,000 in debt.

Of course, as with anything in life, there are caveats. You must meet the income guidelines to qualify to file for Chapter 7 bankruptcy, and your assets will be analyzed to see what you can pay toward your debt first.

Debts that are Not Discharged

You can’t discharge everything you owe in a Chapter 7 bankruptcy. Some debts are excluded. Examples include child support and alimony, either your ongoing payment or any amount that you have not paid over time. If you want to get out of paying those, you’ll need to talk to a family law lawyer about modifying your agreement.

You also won’t be able to discharge tax debt or anything you owe to the government, such as for criminal penalties or restitution. You also can’t discharge student loan debt.
Well, technically you can discharge student loan debt, but it is so hard to do and the chances of your request being approved are so slim that you might as well accept that it can’t be discharged.

Even though you can’t discharge these debts in a Chapter 7 bankruptcy, you can free up a lot of money by discharging your other debts. You can then use that money to get current on the debts that cannot be discharged. You’ll have greater control of your finances and less debt overall.

Liquidating Assets

You can’t just proclaim that you aren’t able to pay and then have all your unsecure debt discharged under a Chapter 7 bankruptcy. In addition to passing the “means test” to qualify to file for Chapter 7, you also have to submit your assets for review.

A certain amount of your assets will be exempt, such as personal belongings, equity in your home, and equity in your car. Your bankruptcy attorney will go over the specific exemption limits and help you understand which of your assets may be subject to liquidation, if any.

Filing for Chapter 7 bankruptcy can help you get rid of quite a bit of debt and start taking control of your finances again. You will need to meet with a Mesa Chapter 7 bankruptcy lawyer to review your finances and to learn how bankruptcy can help you, specifically. If you can’t qualify for Chapter 7, you can file for Chapter 13 bankruptcy and get a more manageable debt-repayment plan that will be done in just three to five years.

Call My AZ Lawyers today to talk with a bankruptcy attorney about your options. We’ll help you understand how bankruptcy can benefit you personally and what strategy will give you the greatest debt relief. Our attorneys will perform a thorough review of your finances and then help you file for bankruptcy. You could be on your way to a fresh financial start fast. We serve clients in the Mesa, Glendale, Tucson, and Phoenix areas. Call us today to schedule an appointment with a Chapter 7 bankruptcy attorney and to start learning about your options for debt relief.

My AZ Lawyers

Mesa Location:
1731 West Baseline Rd., Suite #100
Mesa, AZ 85202
Office: (480) 448-9800

Glendale Location:
20325 N 51st Avenue Suite #134, Building 5
Glendale, AZ 85308
Office: (602) 509-0955

Tucson Location:
2 East Congress St., Suite #900-6A
Tucson, AZ 85701
Office: (520) 441-1450

Avondale Location:
12725 W. Indian School Rd., Ste E, #101
Avondale, AZ 85392

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