What Can You File Bankruptcy On?
Personal bankruptcy protection is available to people struggling with various kinds of debt for a variety of reasons. If you're wondering whether your debts make you eligible for bankruptcy protection, you're not alone. Bankruptcy law can be confusing, but many of the most common types of debt may be eligible for discharge by the bankruptcy court.
Every case is unique. If you'd like to learn more about bankruptcy from a lawyer in your area, please fill out the free case review form below and arrange a free, no-obligation consultation today.
What Can You File Chapter 7 Bankruptcy On?
There are two types of personal bankruptcy, and each is designed to help with different types of debts. Here's a look at what Chapter 7 bankruptcy (also known as "straight" bankruptcy) might be able to help with.
- Credit card debt: Chapter 7 bankruptcy works by offering filers a complete discharge of some or all of their unsecured debts (that is, debts that are not connected to any property). In many Chapter 7 cases, filers who are maxed out on their credit cards find relief from the court. Keep in mind, though, that any luxury items with a value in excess of $500 purchased within 90 days of a bankruptcy filing will generally not be discharged by the court.
- Medical bills: Debt from doctor's visits, medical procedures or other medical care may be forgiven under the terms of a Chapter 7 filing.
- Payday loans and cash advances: Another relief for many potential bankruptcy filers is that Chapter 7 has the ability to wipe out debt from payday lenders or cash advances. As with credit card debts, though, there are some limits: loans taken out within 70 days of a bankruptcy filing that total more than $750 are generally not excusable in court.
While Chapter 7 bankruptcy has wide-reaching powers, it does have limits. In most cases, certain debts cannot be discharged in Chapter 7 filings. These include most tax debts, child support or alimony payments, student loans, criminal fines and penalties and some law suit debts. You also must qualify for Chapter 7 under the means test, and may have to surrender some non-exempt assets to the courts.
What Can You File Chapter 13 Bankruptcy On?
Chapter 13 bankruptcy works differently: in Chapter 13 cases, filers make regular payments to their creditors through the court over a period of three to five years, with the goal of catching up on overdue payments while staying current on any loan payments that come due in that time.
Chapter 13 is known for helping filers with these types of debts:
- Mortgage payments: If you're in danger of losing your home to mortgage foreclosure, filing for Chapter 13 bankruptcy may help. While the bankruptcy court cannot modify the terms of your mortgage agreement, the repayment plan gives you an opportunity to catch up on your arrearages. Alternately, Chapter 13 bankruptcy may simply give you and your family enough time to make alternate living arrangements while you sort out your finances.
- Car payments: Similarly, if you're in danger of losing your car to repossession, filing for Chapter 13 bankruptcy may give you the opportunity to catch up on payments and become current so you can hang onto your car.
Learn More from a Bankruptcy Lawyer
If you're interested in learning whether you can file bankruptcy on your debts, take a moment to speak with a bankruptcy lawyer, who may be able to answer your questions more specifically and offer you the guidance you need.