Will the filing of a Chapter 7 Bankruptcy erase all of my debts?

The ultimate goal of filing a Chapter 7 Bankruptcy is to obtain a discharge. In otherwords, to obtain a fresh start and to put your financial problems behind you. Bankruptcy is most often used to wipe out unsecured debts, such as medical bills, personal loans, past due utility bills, business debts, charge accounts, collection agency debts, and late fees. However, there are certain debts that can survive bankruptcy, meaning that you will continue to owe the creditor until those debts are paid in full.

Your Bankruptcy Determines Which Debts Will Be Discharged

The discharge that you receive will be effective in eliminating all debts except:

       1.  certain taxes; or  (Most taxes are nondischargeable. There are certain exceptions that if the tax is so many years old that it can be discharged. This is rare and even in those situations you must have in fact filed a tax return). 

       2.  some debts not listed in the schedules; or  (Sometimes when a person files for bankruptcy they may not have listed a debt, as they either forgot about it or did not even know about it. In a Chapter 7 Bankruptcy, all debts that were not listed are still discharged, as long as the bankruptcy is determined no be a no-asset case. This means that you were able to exempt all of your assets, so the trustee will not be selling any of you property to distribute money to creditors. The thought is that a creditor would not be harmed by not getting notice of your bankruptcy filing since it would not have received anything anyways).

       3.  debts from domestic support obligations; or (These debts are defined as obligations for such things as child support, alimony or any other type of debt that would be in the nature of alimony, maintenance or support and are nondischargeable).          

       4.  most fines and penalties owed to governmental units; or  (Debts that have been incurred from any fines, penalties or restitution imposed on a person from a federal, state or local government are nondischargeable).

       5.  most student loans; or  (Discharging student loans are more difficult that even discharging taxes. The only exception to discharging a student loan is obtaining a hardship discharge. It is somewhat of an overstatement, but this basically means that you have to be on your death bed. A financial hardship by it self is usually not sufficient).         

       6.  debts which were or could have been listed in a prior bankruptcy in which the discharge was denied; or  (If you have had a prior Chapter 7 Bankruptcy case dismissed that was due to some fraud or misconduct on your part, then those debts are not dischargeabe in your new case).

       7.  debts incurred by driving while intoxicated; or  (Debts that you have incurred by driving while intoxicated whereby you have killed or injured someone are not dischargeable.  Note that only debts incurred from personal injuries are not dischargeable.  Debts for property damage are dischargeable).

       8.  debts which have been ruled nondischargeable during the case; or  (Unless the debt falls within one of the listed exceptions, then the debt is dischargeable.  However, if a creditor files an objection to the dischargeabilty of the debt (there are specific grounds that have to be met in order to to do this) and the court has ruled that the debt is nondischargeable, then that particular debt cannot be discharged in your bankruptcy).

       9.  debts incurred to pay nondischargeable taxes; or  (Sometimes a person may incur a debt through the use of a credit card or a loan to pay off a tax debt. If the tax debt would have been nondischargeable, then the debt incurred through the use of the credit card or the loan is likewise nondischargeable).

      10. marital property settlement agreements; or  (Any debts that are owed to a spouse, former spouse or child and that arose out of a divorce or separation agreement cannot be discharged in a Chapter 7 Bankruptcy).

      11. certain condominium, homeowner's association and cooperative fees; or  (Fees or assessments owed on condominium, homeowners association dues or cooperative fees that become due after your bankruptcy filing cannot be discharged, as long as you or the trustee have an ownership interest in the unit. Any fees that were owed before the bankruptcy filing can be discharged).

      12. certain court fees and costs owed by prisoners; or  (People that are prisoners oftentimes file various complaints or motions and incur different types court fees and expenses. Those types of debts are not dischargeable in a Chapter 7 Bankruptcy). 

      13.  debts for repayment of loans from pension plans  (If you have taken out a loan from a retirement plan that is qualified under IRS rules, then you are obligated to pay that loan back and cannot discharge that debt in your Chapter 7 Bankruptcy).

  • If you would like a free consultation to discuss the best way to procced on your filing for bankruptcy, then call Pittsburgh Bankruptcy Attorney Rodney Shepherd at 412-471-9670 or fill out the  convenient online contact form for a personalized assessment of your case.