What Debts Can Be Erased in a California Chapter 7 Bankruptcy?
No one dreams of the day that they file bankruptcy, but bankruptcy relief is a longstanding tradition of our American legal system that helps people get financial relief and start working towards a more prosperous tomorrow. Many successful people have declared bankruptcy and gone on to financial prosperity, including our current President, Walt Disney, Henry Ford, and even Abraham Lincoln, who filed for bankruptcy in 1833 after his small business went bust.
Not all debts are necessarily dischargeable in bankruptcy, but many are, and, a properly completed Chapter 7 bankruptcy can mean you are debt-free in some cases.
What Can and Cannot Be Discharged in Bankruptcy
It may be easier to talk first about the types of debts that generally cannot be discharged in a Chapter 7 bankruptcy. Student loans, for example, are often not dischargeable, although they may be discharged if the filer can show an undue hardship in having to pay back the loans.
Also you will not be able to discharge your debts for state, federal, and local taxes, although you can work with an attorney to reduce the amount owed and/or work out a payment plan. You also cannot discharge a personal injury judgment that was the result of a DUI.
You also cannot discharge alimony payments and child support payments, although you can work with a family law attorney to pursue a modification in California family court based on changed circumstances, such as loss of a job.
That leads us to what you can discharge, which includes:
- Credit card debt
- A judgment from a personal injury case (non-DUI)
- Other lawsuit judgments brought against you or your business
- Overdue bills, including utility bills
- Medical bills
- Deficiency judgments after a foreclosure
Chapter 7 Is Not Your Only Option
Not everyone can pursue a Chapter 7 bankruptcy in California, especially those persons who earn wages above the state median income. But regardless of how much you make, Chapter 7 may not be the best option.
You can also pursue a Chapter 13 bankruptcy which allows you to work out payment plan with creditors, which can include lower balances, lower interest rates, and/or longer terms of repayment. The upside of a Chapter 13 filing is that you will not have to liquidate your assets as you will have to do in a Chapter 7 filing.
Additionally, you can work with an attorney outside of the bankruptcy system to pursue loan modifications with your creditors which have the potential of achieving much of the same benefits as a Chapter 13 filing.
Get on the Road to Relief With the Bankruptcy Attorneys at Gastelum Law
If you are unable to pay your bills, we may be able to help reduce your debt burden and get you and your family on the road to financial relief, either through filing for a Chapter 7 or Chapter 13 bankruptcy or through a loan modification. At the Law Offices of Omar Gastelum and Associates, PLC, our experienced attorneys will work with you to obtain both immediate and long-term relief through loan modification and, if necessary, bankruptcy protection. Contact the Law Offices of Omar Gastelum and Associates, PLC today for a free consultation on how our attorneys can help you start building a better financial tomorrow today.