Which Bankruptcy Debts Can Be Cleared

Bankruptcy discharge is a lawful term which means that all your obligations towards the creditors have been cleared and you no longer have to payback certain kind of debts. Your creditors no longer have the right to try and collect debts from you.

How fast can bankruptcy be discharged?

It depends on the chapter you have filed under (Chapter 7 or 13). If you have been granted to file under Chapter 7 bankruptcy can be discharged within couple of months.

Chapter 7 bankruptcy however requires you to sell all your property that is not exempt under the federal or the state laws in order to payback your creditors.

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If however you have filed under Chapter 13 bankruptcy, you will not have to sell your property to settle your debts to the creditors because it will be taken care of by the repayment plan.

With Chapter 13 bankruptcy will be discharged after you have completely paid back all debts from your payment plan.

Which debts can be cleared and which not?

Some of the debts you can successfully clear are:

1. Credit card debts
2. Unsecured loans
3. Utilities
4. Bills from department stores
5. Gas bills
6. Legal bills
7. Health/medical bills

There are however some bills Congress has determined must be paid and can not be discharged. Most of these debts can not be discharged because of the way in which they incurred, meaning that debtors improper behavior is responsible for them.

Some of the debts that can not be discharged are:

1. Alimony
2. Child support
3. Taxes
4. Student/collage loans
5. Debts incurred from embezzlement or fraud
6. Secured loans
7. Debts which are not stated in your bankruptcy documentation
8. Debts for luxury services or goods and cash advances made just before filing bankruptcy

Exactly which of your assets will be turned over to the trustee is determined by the bankruptcy law. Under federal bankruptcy law you are allowed to protect some of your property from the creditors claims.

This is allowed because some items are exempt and protected under the federal or the state laws.

Because most states have used the privilege to adopt their own exemptions you will have the right to choose between the state and federal bankruptcy exempts.

It is very useful because although types of property allowed to be exempt are very similar in both federal and state law, allowed asset values can be very different (this is why it pays to consult a bankruptcy lawyer).

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