Financial trouble is not only serious, it’s also extremely emotionally tasking, making it one of the most difficult ordeals an individual can face. However, there are ways out of such a predicament, and bankruptcy is one of the best ways to regain your independence. One of the most common reasons people hire a bankruptcy attorney is in El Cajon, CA is to discharge some of the debt they’ve gained over the years. But what debt can bankruptcy eliminate?

What debt goes away in Chapter 7?

A Bankruptcy discharge serves to release a debtor from all personal liability and puts a stop to efforts from creditors to make collections against them. This essentially means that the debtor is no longer under any obligation to keep paying any debt that’s been discharged through bankruptcy.

However, not all debt falls under the capabilities of Chapter 7, so let’s first see what this type of bankruptcy can help you with. The debt that goes away during this bankruptcy is:

  • Veteran assistance overpayments and loans
  • Overpayments regarding social security
  • Accounts with revolving charges with the exception of extended payments
  • Attorney fees with the exception of alimony awards and child support
  • Various tax penalties, as well as unpaid taxes that have past a certain amount of time
  • Judgements from the civil court, unless they’re based on a fraud
  • Money you owe due to lease agreements with the exception of past due rents
  • Business debt
  • Claims for automobile accidents with the exception of drunk-driving incidents
  • Deficiency balance repossession
  • Student loans in a rare circumstance where it’s possible to provide proof of undue hardship
  • Dishonored checks that aren’t based on a fraud
  • Utility bills
  • Personal loans taken from employers, family, and friends
  • Medical bills
  • Accounts from a collection agency
  • Charges from credit cards, including late fees and overdue

Pay attention to the timing

Another important aspect of receiving discharge is the time of the incurred financial obligations:

  • A pre-petition debt means you’ve accumulated before you started filing for bankruptcy. This is the debt you’ll be able to discharge if it qualifies for elimination.
  • A post-petition debt is the debt you rack up once you’ve already begun filing for bankruptcy, and this is not something you can discharge.

What debt goes away in Chapter 13?

Completing the repayment plan you and your creditors have agreed upon under Chapter 13 means you’ll receive a direct discharge that will eliminate the remaining balance regarding your qualifying debt. However, it’s worth knowing what the possibilities of this bankruptcy are and which debt it will definitely file off:

  • Debt on your credit cards
  • Medical bills and expenses
  • Personal loans which don’t have a collateral
  • Old tax obligations
  • Debt stemming from negligence
  • Breach of contract
  • Post-petition dues
  • Government forfeitures, penalties, and fines
  • Crammed-down and stripped liens

Which experienced bankruptcy attorney in El Cajon, CA should I turn to?

When you’re thinking of filing bankruptcy, it’s important to be aware of the types of debt it can help you with, just as you have to know which debt is not dischargeable under certain types of bankruptcy. This way, you’ll be able to adequately prepare for your financial freedom and future after bankruptcy and prevent involuntary bankruptcy from occurring. It’s always best to take the reins and be the master of your own life.

That’s exactly what Chang & Diamond are here to do. We’ll help you choose the right type of bankruptcy for you that will discharge most of the debt you’ve accumulated over time. We’re your go-to bankruptcy lawyers in El Cajon and we’ll provide the necessary legal counsel and representation in court. We always keep your best interests in mind and it’s our wish to rid you of the stress and allow you to enjoy the gorgeous Spring Valley. Contact us today!