Lefkovitz & Lefkovitz
Nashville Office 615-686-2279 Cookeville Office 931-400-2218
Serving all of Middle Tennessee's Bankruptcy Needs

Bankruptcy pros and cons: How much can I discharge in Chapter 7?

Living in serious debt can be an incredibly stressful experience. With the powerless feeling of not being able to pay your bills and the constant harassment from creditors, it can seem like a nightmare from which you can't wake up.

Enter Chapter 7. For consumers who qualify for it, this type of "liquidation" bankruptcy can be a godsend. Many people who have explored the possibility of filing for Chapter 7 may wonder how much of their debt can be discharged -- effectively wiped out, removed -- in the bankruptcy process. Here are some important basics to know.

Types of debt that can be discharged

Some debtors are shocked when they learn the extent of Chapter 7's reach. If you qualify for Chapter 7 via the "means test," which is used to determine your ability to pay your debts, you can use your bankruptcy filing to get rid of:

  • Your credit card debt: All of it, as much of it as you have. Even multiple cards with big balances.
  • Medical debt: This includes large hospital bills, significant debts owed on surgeries, balances on treatments, specialists and testing, and even dental bills.
  • Personal loans and lines of credit: In general, all types of unsecured loans (with the notable exception of student loans) are fair game in a Chapter 7 bankruptcy.
  • SOME kinds of mortgage debt: In certain cases, a bankruptcy attorney can use legal strategies to reduce mortgage debt, particularly if the property is "under water" and when there are multiple loans on a house.

Every situation is different

In the right hands, Chapter 7 is a fantastic tool for escaping crushing debt, getting collectors off your back and moving on to a bright financial future. For some people, Chapter 13 is a better option, either because they don't qualify for Chapter 7 or because they need to keep certain assets (such as a house in danger of foreclosure) that aren't protected under Chapter 7.

If you're thinking about bankruptcy, get advice from a professional. Your situation is unique and should be evaluated by an experienced attorney who can explain the pros and cons of Chapter 7 and other options.

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