People typically turn to Chapter 7 bankruptcy when they have so much debt they do not know where else to turn. If you qualify for this branch of bankruptcy and decide to use it, filing can have profound effects on your debt load. What happens to your debt when you use Chapter 7? How does it affect your debt load? Here are some of the answers you might want to know about Chapter 7 and debt.

Chapter 7 Does Not Eliminate All Debt

One thing that people may not realize is that Chapter 7 bankruptcy does not eliminate all debts. You might owe money for things that a Chapter 7 case cannot eliminate, such as child support payments. In many cases, Chapter 7 will not eliminate IRS tax payments you owe or student loan debts. Your bankruptcy attorney can review your debts to see which ones you will still owe if you file a Chapter 7 case. You should find out which debts will not qualify for a discharge through Chapter 7 before you file your case.

Chapter 7 Eliminates Qualifying Debts

The reason people use Chapter 7 is for the discharge of debts that it offers. A Chapter 7 bankruptcy filing will provide a discharge for all your qualifying debts, including your credit card balances. If your credit card balances are the main cause of your financial issues, Chapter 7 might provide the relief you really need to get a fresh start.

The Court Updates Your Credit Report

When the court offers a discharge for your qualifying debts, they will update your credit report. Any debt that receives a discharge through your Chapter 7 case will show a zero balance after the court settles your case. Each debt that receives a discharge will also include a note that states it was part of a bankruptcy case.

The Court Issues an Automatic Stay

The other thing to realize is that the court issues an automatic stay when you file your case. This stay stops your creditors from asking you to pay your debts, and it even includes debts that will not qualify for a discharge through your bankruptcy case.

If you have debts that your case does not discharge, you will be responsible for paying them. Do you have further questions about Chapter 7 and how it works? You can learn more by scheduling an appointment with a local bankruptcy attorney.