Chapter 7 bankruptcy Wipes All Unsecured Debts
Since creditors hold no collateral, they have very little legal leverage when it comes to collecting. The courts sympathize with debtors who are unable to repay delinquent accounts due to legitimate circumstances; but the court looks closely against those who buy on credit with no intention of repaying. Unlike secured debts, mortgages, auto loans, student loans, alimony, child support and some taxes, mounds of unsecured claims can be wiped clean with one discriminate wave of the Chapter 7 bankruptcy judge’s gavel; and creditors can do little to protest. Filing an adversary proceeding or alleging fraud against the borrower/debtor may be an option, but in it may be to no avail.
