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Debts That Stay With You After Chapter 7

Due to the rampant financial difficulties that have occurred in recent years, filing for bankruptcy protection has become increasingly commonplace. It is has truly become a refuge for many of those who find their debt burden overwhelming and are in danger of losing everything they have worked years to obtain. Filing for Chapter 7 bankruptcy in particular has significantly increased. Known alternatively as liquidation bankruptcy, success in filing provides the beleaguered debtor with a chance to start fresh with the elimination of many, if not the majority, of their debts. It should be noted that failure to properly follow the rules of bankruptcy procedure can lead to a denial of discharge.

But while Chapter 7 bankruptcy may be the best option for many, it is not a panacea for all ills. For one thing, there are some debts that are generally nondischargeable. This means that there are debts you have that will not be wiped out even if you successfully file for Chapter 7 bankruptcy. You will still need to pay for these debts, although a few of them can be discharged at the court’s discretion, and your creditors can still sue for payment.

If you are considering Chapter 7 bankruptcy and the bulk of your outstanding obligations are considered nondischargeable, you may need to pursue an alternate method of debt relief. Below are some debts that will always be nondischargeable under the Bankruptcy Code:

  • Student loans
  • Personal injury claims due to DUI
  • Tax-sheltered retirement plan payments
  • Fines and penalties imposed by government agencies
  • Alimony and child support
  • Legal fees for child custody and support disputes
  • Criminal restitution and court fines
  • Debts not included in the petition for bankruptcy

There are also otherwise dischargeable debts that may be denied discharge by the court under certain circumstances. These include purchases of luxury items in excess of $600 on a single credit card bought within 90 days of the bankruptcy filing and cash advances in excess of $875 incurred within 70 days of filing for bankruptcy.

It is important to know which debts will not be wiped out if Chapter 7 bankruptcy is being considered. Even if there is no other option, forewarned is forearmed.

Bankruptcy and Its Immediate Benefits

Nobody wants to live a life that is weighed down by debts. This can lead to a great deal of stress due to the constant hounding and harassment by lenders and creditors as they attempt to pressure you to repay them. Letters from law firms, repeated phone calls at your workplace or at home, an eviction notice, a bank account levy or garnishment – these are just a few of the tactics creditors use to make you pay and which can cause you immeasurable stress.

Even if you are facing serious financial difficulties and/or are being harassed by creditors, there is a solution that will allow you to regain control of your financial life and start anew – bankruptcy. There are a number of different forms of bankruptcy, each which offers varying benefits or meets the needs of varying debtors.

Typically however, filing for bankruptcy brings benefits that provide immediate relief from a number of financial concerns. The first of these benefits is the automatic stay, which ensures instant relief from creditors’ tactics as well as lawsuits, evictions or unpaid rent, foreclosures, unpaid utility bills, and wage garnishment. Debt discharges are often another benefit debtors receive when filing for bankruptcy. Chapter 7 bankruptcy in particular allows debtors to discharge, or eliminate, certain debts. Some examples of dischargeable debts are those from credit cards, line of credit, medical bills, unpaid rent, unpaid utility bills, and personal or signature loan.

Paying Non-dischargeable Debts Through Chapter 7 Bankruptcy

While unsecured debts may be discharged, freeing you from the financial burden and stress they cause, there are those that you will still need to pay after your bankruptcy case is completed – your secured debts. These can be accounted for through the sale or relinquishing of assets, like cars, homes, bank accounts, and jewelry. Some of debts that cannot be discharged are debts acquired through fraud, damages in respect of personal injury to someone, student loan, child support, taxes, criminal fines, and alimony.

Another way of paying secured and non-dischargeable debts can be done by having your assets sold by a court-appointed trustee, the method stipulated in Chapter 7 Bankruptcy, also known as liquidation bankruptcy. Going through this process can be complicated and frustrating, not to mention unnecessary, and, as such, many people seek the help and advice of a qualified bankruptcy lawyer.