How to Get Rid of Debt With Chapter 7 Bankruptcy Laws

A debtor wanting most of the debts to be forgiven usually seeks to file chapter 7 bankruptcy instead of other types of bankruptcy such as chapter 13. Under the chapter 7 bankruptcy laws, most debts are discharged and most creditors must cease collecting efforts and any legal actions against debtors. However, the chapter 7 bankruptcy laws include many exceptions.

The chapter 7 bankruptcy laws are complicated because there are many exceptions so many people seek the help of a bankruptcy attorney. A bankruptcy attorney can help the debtor file chapter 7 bankruptcy correctly and comply with the necessary laws. If a filer fails to comply with the chapter 7 bankruptcy laws, the case can be dismissed, rejected or converted to another type of bankruptcy filing.

Under the chapter 7 bankruptcy laws, creditors can file complaints and object against the discharge of their debts. If creditors do not object, the bankruptcy court will issue a discharge order based on the types of debts. The court often acts fast and a discharge order could be received only a few months after the first meeting of creditors.

Almost all chapter 7 cases result in discharge orders. However, there are exceptions. Examples of reasons why a bankruptcy court may deny a discharge is if the court finds evidence that the debtor tries to deceive the court, takes advantage of the chapter 7 bankruptcy laws, illegally transfers assets or hides assets to avoid liquidation. If there is any evidence that a crime has been committed, then the bankruptcy court will reject the case.

If the debtor has secured debts, secured by properties such as a house or a motorcycle, then the creditors of secured debts can still claim the assets that were used as collaterals for the debts even after the discharge order has been issued. If a debtor wants to keep the assets that were used as collaterals, according to the chapter 7 bankruptcy laws, the debtor can reaffirm the debts to keep the assets.

Once a discharge of debts has been granted to the chapter 7 filer, creditors of discharged debts may not continue to harass the debtor in order to collect the debts. Creditors that sell off the debts to collection agencies cannot themselves contact the debtors to collect the debt. The collection agency also cannot keep trying to collect from the debtor.

Debts that are not discharged under the chapter 7 bankruptcy laws, however, can still be collected even after the bankruptcy case is closed. Examples of such debts are alimony, child support, taxes, guaranteed loans and debts that were intentionally created to take advantage of the chapter 7 bankruptcy laws.