For those who are up to their necks in debt, filing for chapter 7 bankruptcy can bring an almost instantaneous feeling of relief. The real relief, however, comes a few months later when you receive the final notice of discharge. To find out more about debt discharges and what it means to your financial situation, read on.
Including All Debts
One of your first moves after contacting a bankruptcy lawyer is to fill out a form listing your debts. This may be called a debt matrix by some. Even if you are not sure you can include the debt with your bankruptcy filing, include it and let your attorney make the determination. Unfortunately, not all types of debts can be discharged. For instance, only certain tax debts can be discharged with chapter 7. Other common debts that cannot be discharged include:
- Student loan debt – However, the bankruptcy courts will consider hardship cases under certain circumstances.
- Child support back payments – In some cases, spousal support may not be discharged.
- Certain legal expenses – Generally, that means legal fees owed to lawyers, court costs, and personal injury judgments.
After You File
You should receive a copy of your federal filing soon after it's filed, so take a few moments to make sure everything on the debt matrix looks correct. Compare it to the forms you filled out and call your lawyer if you notice that a debt was left off or any inaccuracies. In most cases, an uncomplicated chapter 7 can take several months to be complete but that depends on your local federal court calendar. However, you don't have to wait till the final discharge to enjoy some debt relief. Check with your lawyer first, but, in general, you won't need to make any further payments on:
- Credit cards.
- Medical debt.
- Personal loans.
- Payday loans.
Secured Debts and Discharges
Debts like your auto loan and the mortgage fall into a special category. You can include these debts in your bankruptcy but you will lose the property if you do. Since the automatic stay protects you temporarily from foreclosure and repossessions, you have a reprieve to figure out what you want to do about your home and vehicle. If you want to keep the property, talk to your lawyer about reaffirming the debt. That means you will still have to pay the loan as agreed even after bankruptcy is over.
It's a great feeling to hold the final discharge in your hands and know that you have another chance to get things right with your finances. Speak to a bankruptcy lawyer at a law firm like McCool & McCool to find out more.