Filing for Chapter 7 bankruptcy can erase many debts and give you a fresh start. Knowing which debts qualify helps you decide if it is the right option.
Debts that Chapter 7 can discharge
Chapter 7 wipes out unsecured debts. These are debts not tied to property like a home or car. Common examples include:
- Credit card balances: Outstanding balances on personal cards.
- Medical bills: Unpaid hospital and doctor fees.
- Personal loans: Unsecured and signature loans.
- Collection accounts: Debts sold to third-party collectors.
- Deficiency judgments: Remaining balances after a repossession or foreclosure.
- Overdue utility bills: Past-due amounts owed to utility providers.
- Civil judgments: Most court-ordered monetary judgments from unpaid debts.
Discharging these debts can also stop wage garnishments and collection calls.
Debts that Chapter 7 cannot discharge
Not every debt qualifies for discharge. Some obligations survive bankruptcy regardless of your financial situation. These non-dischargeable debts include:
- Child support and alimony: Domestic support obligations remain in full.
- Student loans: Dischargeable only if you prove undue hardship in court.
- Recent tax debts: Most income taxes from the last three years.
- Fraudulent debts: Debts arising from dishonesty or misrepresentation.
- Criminal fines: Court-ordered penalties and DUI-related damages.
- Unlisted debts: Any debt you fail to include in your petition.
Knowing these limits helps you set realistic expectations before you file.
Connecticut exemptions and secured debt
Connecticut General Statutes § 52-352b protects certain property from creditors during bankruptcy. Key exemptions include up to $250,000 in home equity, up to $7,000 in vehicle equity and tools necessary for your trade or occupation. To keep a secured asset like a car or home, you must reaffirm that debt by signing an agreement to continue payments. Connecticut lets you choose between state and federal exemptions but you cannot combine both sets.
Speaking with a bankruptcy attorney
Chapter 7 rules involve eligibility requirements, exemption calculations and filing deadlines that vary by situation. An attorney can help you understand how these rules apply to your specific debts and assets. Speaking with an attorney may also clarify whether Chapter 7 is the right path or whether another option better fits your circumstances.