A chapter 7 can generally discharge (eliminate) all credit cards, personal loans (not secured) and medical debts. You can discharge a secured debt (vehicle, boat or trailer loan) if you wish to surrender the asset. If you wish to keep the asset, you will need to execute a Reaffirmation Agreement (the attorney will take care of this and explain it to you). You may not discharge a debt incurred “fraudulently” in a chapter 7 but you may in a chapter 13. Some federal tax debts are dischargeable – it depends how old the debt is and when the tax return was filed. Student loans are not automatically dischargeable. A separate action within the bankruptcy called and Adversary Proceeding must be filed and served on the Department of Education and the student loan provider. Alimony and child support may not be discharged.

There is not a form response to this question as every person and each situation is different. My advice to people considering whether or not to file a bankruptcy is to ask whether they see a realistic light at end of the financial tunnel. Basically, do you have a way to increase income or decrease expenses enough so that you can pay significantly more than the monthly minimum payments on the credit cards/loans to get the balance down to zero in a reasonable amount of time? If you answer yes – make sure that you are being realistic and can commit to the extra payment every month.  By the time most clients reach the point of contacting my office, there is no other realistic option. Debt consolidation is generally a bad idea as it will cost much more than a bankruptcy, destroy credit much worse and has a very low chance of success.  I have worked with many clients that came to me after signing up with a debt consolidation company and spent thousands of dollars trying to handle their debts outside of bankruptcy.

I believe that it is important to have a consultation with an attorney (not a paralegal or other person working for the attorney) to see if you are comfortable with that attorney representing you for the process of seeking a discharge of your debts in federal bankruptcy court.  I would make sure to ask how long they have practiced bankruptcy and whether they handle only bankruptcy matters or are they a “jack of all trades” and handle several areas of law.  It is important to hire an attorney that appears before the bankruptcy trustees and judges on a regular basis. Although the practice of bankruptcy is governed by the federal code – the implementation of the practice can change by how a judge or trustee decides to handle certain situation. A trustee may start asking questions that they had never asked before. If the attorney does not appear at trustee meetings and court hearings on a regular basis, they may not be aware of such changes.

There have been recent changes at the Department of Justice for how they will review attempts to eliminate or reduce the amount of student debt a debtor in bankruptcy has. Before the change at the Department of Justice, it was nearly impossible to discharge student loans in bankruptcy. Although the bankruptcy code and case law has not changed, this new direction that will be taking place under the current presidency means that the chance to discharge some or all of your federally guaranteed student loans should be much easier now than it has been for several decades. Learn more in my recent blog post on How to Discharge Student Loan Debts Through Bankruptcy Law. 

Generally, no.  If a Chapter 7 Bankruptcy is filed, the assigned Trustee will review the value of your assets, the secured liens against those assets and see how much equity you have in each asset.  If you have been able to exempt (protect) that equity, the Trustee cannot take your asset.  If you do not have enough exemptions available to fully protect the equity, then the Trustee may consider taking the asset and selling it to benefit the creditors of the case.  If that appears to be a likely outcome, a person can file a Chapter 13 Bankruptcy and protect their assets.

The answer will be determined by the Means Test.  This is based on how much total income you have received in the prior six months.  If that annualizes out to more than the median income in your state, you will likely need to file Chapter 13.  If your income is under the median, the presumption is that you can file Chapter 7.  The attorney will gather the information needed to properly prepare the Means Test to review with you and to offer guidance based on the results.

Yes.  Bankruptcy does not prevent a future creditor from offering you credit following the bankruptcy discharge.  It is more of a warning to future creditors that you had difficulty with debt in the past.  The bankruptcy filing will be on your credit report for 10 years.  During that time, potential creditors will look to see how much time has passed since the bankruptcy was filed, what your current income is and whether you are carrying any debts incurred since the bankruptcy completed.  Based on this information, the creditor will decide whether to offer you credit and, if so, at what interest rate.  Generally, a car dealership will offer a person a loan shortly after a bankruptcy completes, but at a high interest rate.  Mortgage lenders will likely consider someone approximately two years after the bankruptcy discharge has been entered.