A Chapter 7 bankruptcy is often the most attractive to the consumer, because it results in the elimination of debt, without the requirement of having to repay any debt as under Chapter 13. In most cases, this can be accomplished without the consumer having to sell off, or liquidate, any assets, thanks to the many property exemptions available under the law. In addition, Chapter 7 is typically a very short bankruptcy lasting only 4 to 6 months before discharge.
Not all debt is dischargeable in bankruptcy, but most common types of debt that people get in over their head with are dischargeable. The following are some of the most common types of debt typically dealt with in a Chapter 7 bankruptcy in Orange County proceeding.
Credit Card Debt – At least some amount of credit card debt is carried by the consumer in the vast majority of bankruptcy filings. Most credit cards are unsecured, meaning that they are not tied to a car, home, or bank account that was put up as collateral in exchange for the extension of credit. As an unsecured debt, the credit card balance can be discharged in Chapter 7 bankruptcy.
In rare circumstances, credit card companies do not let go of their debt. They may claim that the information on your credit card application was false, or that you purposely ran up your balance without ever intending to pay it off. Accusations like this may need to be litigated in a nondischargeability action or other adversary proceeding as part of your bankruptcy, so make sure the bankruptcy attorney you hire is capable of tackling any bankruptcy litigation that may arise or knows how to avoid it altogether.
Medical Debt – Regardless of how good your insurance is, a serious medical need – especially one requiring surgery or hospitalization – can quickly create medical bills far beyond your ability to repay. This is particularly the case when an injury or illness has caused you to miss significant time from work or even lose your job. With bills coming from doctors, hospitals, labs, and various different healthcare professionals and facilities, your life can become saturated with threatening letters and harassing phone calls as these bills are turned over to collection agencies or sold to professional bill collectors.
Medical debt is in fact a leading cause of bankruptcy. Fortunately, in most cases medical debt is unsecured and therefore dischargeable in bankruptcy.
Tax Debt – Federal and state income tax are dischargeable if it meets certain conditions. Other taxes, such as estate and gift tax are generally not subject to discharge. Also, if the government files a tax lien on your property, you can lose a valuable asset to the IRS in its attempts to collect the debt. If you are delinquent on your taxes, seek the advice of experienced Orange County lawyers who can advise you on your options.
Judgments – Outside of bankruptcy, an unsecured creditor may go to court and secure a money judgment against a debtor. The creditor can then collect on the judgment through a number of ways, such as a wage garnishment or placing a lien on the debtor’s property. When the underlying debt would have been dischargeable in bankruptcy, the bankruptcy court may be able to discharge the judgment as well. Some judgments are nondischargeable, such as those that stem from an assault or a personal injury caused by drunk driving. If you have a judgment against you, be sure and include that information when you visit with a Southern California or Orange County bankruptcy attorney at the Fishback Law Corp for your Chapter 7 debt relief.
Contact a dedicated legal team for reliable bankruptcy assistance today
For experienced assistance with your California bankruptcy matter, consult the skilled team at Fishback Law Corp today. Their office is conveniently located in Irvine, and they assist with Chapter 7 and Chapter 13 issues in Orange County and throughout Southern California.