Chapter 7 bankruptcy is an aggressive and effective means of relieving debt. Those who file are able to have various debts discharged; meaning a person no longer has to pay them. This can alleviate much of the anxiety, fear and frustration you are likely feeling if you are buried in debt.
However, it is important to understand that while Chapter 7 can eradicate much or most of your debt, it may not eliminate every one. The following is a list of debts that are typically not discharged in Chapter 7 bankruptcy.
- Most student loans
- Debts you did not disclose
- Recent tax obligations
- Unpaid child or spousal support
- Money owed in civil claims tied to a DUI offense
Though there are exceptions, these debts will likely remain even if you file for Chapter 7 bankruptcy. There are many reasons why certain debts are not dischargeable, but one main reason is related to public policy. In other words, paying off certain debts is considered enough of a benefit to society that it outweighs the individual's need for relief.
While it can be frustrating to have debt remaining after Chapter 7, it should be much easier to pay non-dischargeable debt if you are no longer obligated to pay other debts, including:
- Medical debt
- Credit card debt
- Past due utility bills
- Personal loans
- Old tax debts
Many people are carrying both dischargeable and non-dischargeable debts, so it would be wise to discuss with an attorney if Chapter 7 is a good option for your specific needs. In some cases, there may be other debt relief options available that are more appropriate. However, Chapter 7 bankruptcy can be a good option for many people who qualify and are looking for a financial fresh start.