Erase Your Debts
By far the most important point in bankruptcy is which debts you can erase. For many of my clients, who are overburdened by credit card debt – the good news is that in a chapter 7 bankruptcy – I can literally help you wipe away your balance to $0. That’s right. If you have anywhere from $10,000 of debt to $150,000 of debt and you qualify for a chapter 7 bankruptcy, then you can totally wipe away your credit card debt.
The types of debts that a chapter 7 bankruptcy can totally eliminate are unsecured debts i.e. debts that are not secured by any piece of property that you own. Most common forms of unsecured debts are credit card debts, medical bills, store credit cards (usually), gym memberships, and the list goes on.
Secured debts i.e. those debts that are secured by a piece of property such as your car or house cannot be totally eliminated in bankruptcy. You can either keep the property and continue paying those secured debts or you can surrender the property and erase the secured debt from your name.
There are a few debts that a chapter 7 bankruptcy cannot eliminate. These debts are criminal fines and debts, past alimony and child support, student loans (with only a few exceptions), taxes that became due in the last few years, divorce and property settlements.