Thursday, December 17, 2020

Will Chapter 7 Bankruptcy Discharge All of My Debts?

Are you feeling like you are in the midst of a personal financial crisis? Do you have more bills coming in than you do money to cover them? If so, Chapter 7 bankruptcy may provide you with the financial relief you need. Filing Chapter 7 bankruptcy results in the discharge of a wide range of debts. This is different from Chapter 13 bankruptcy where the end result is being put on a payment plan to help manage your debts. It is important to note that, while Chapter 7 bankruptcy can result in the discharge of most of your debts, it may not result in the discharge of all of your debts.

Will Chapter 7 Bankruptcy Discharge All of My Debts?

Not all debts are dischargeable in bankruptcy. Should you file for Chapter 7 bankruptcy and carry non-dischargeable debt, you will still owe the non-dischargeable debt after your bankruptcy case ends and your dischargeable debts are discharged. Dischargeable debts in both Chapter 7 and Chapter 13 bankruptcy include:

  • Credit card debt
  • Medica debt
  • Lawsuit judgments (not always including associated liens)
  • Lease and contract debt obligations
  • Personal loans
  • Promissory notes

Some debts are dischargeable in Chapter 13 bankruptcy, but not Chapter 7 bankruptcy. These debts include:

  • Debt incurred in order to pay a non-dischargeable tax debt
  • Court fees
  • Condo and HOA fees
  • Debt taken on due to loans from a retirement plan
  • Debts that were not dischargeable in a previously filed bankruptcy

There are other kinds of debt that cannot be discharged in either Chapter 13 bankruptcy or Chapter 7 bankruptcy. For instance, spousal support and child support debt obligations are never dischargeable. Fines, penalties, and restitution you owe due to breaking the law are never dischargeable as are certain tax debts and debts stemming from causing death or injury to another due to intoxicated driving.

There are also some kinds of debt that you will be unable to have discharged unless there is a successful argument that the bankruptcy court should discharge them. These debts will not be discharged unless you can meet a legal exception. A big one in this category is student loan debt. Student loan debt will not be discharged in bankruptcy unless you can argue that they are an unreasonable burden with a very high threshold to meet.

Other times, even debt that is usually dischargeable will not be discharged if a creditor can successfully assert that they should not be. Reasons why a creditor may be able to successfully argue this include:

  • The debt arose from actual fraud
  • The debt arose from purchasing more than $725 worth of luxuries within 90 days of filing for bankruptcy
  • The debt arose from taking more than $1,000 in cash advances within 70 days of filing for bankruptcy
  • The debts are due to willful and malicious acts
  • The debts arose from embezzlement, larceny, or breach of fiduciary duty
  • The debts or creditors are not listed on your bankruptcy papers.

Miami Valley Bankruptcy Attorneys

If you are under the pressure of unmanageable debt, Miami Valley Bankruptcy is here to help. Contact us today.

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Miami Valley Bankruptcy, Brian Lusardi, Esq., assists clients with Bankruptcy matters including but not limited to: Common Myths, Cost of Bankruptcy, Chapter 7 Bankruptcy, Chapter 13 Bankruptcy, The New Bankruptcy Law and Personal Bankruptcy in Xenia, Ohio, and the cities of: Wilberforce, Alpha, Spring Valley, Dayton, Bellbrook, Yellow Springs, Cedarville, Fairborn and Clifton; and the counties of Greene and Montgomery.

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