What Kind of Individual Debts May Not Be Discharged Through a Chapter 7 Filing?
Bankruptcy is a legal option for people in the United States to wipe out unmanageable debt. Although you can get relief from most debts under Chapter 7 of the bankruptcy code, not all money you owe qualifies for discharge--removal of all legal obligation to pay it back.
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Types of Dischargable Debt
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Chapter 7 of the code describes many specific debts that are not subject to being discharged, according to the website of the U.S. Court system. Most types of debt that are a result of irresponsible or malicious behavior or are government-backed are not eligible.
Typical Debts Not Discharged
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The most common debts not covered by Chapter 7, according to the U.S. Court System, are:
* some tax claims
* government-backed education loans
* child and spousal support
* restitution to families or victims for injuries caused by the debtor in an accident involving alcohol.
Creditors must ask the court to determine if a debt is due to irresponsible or malicious behavior, before it will be ineligible for discharge. -
Misconceptions
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Just because a debt is covered under Chapter 7 does not mean it will get discharged. Factors that suggest irresponsibility may deny a discharge. Common reasons for denying a discharge are hiding assets, not keeping financial records or having a reason to explain the debt and not following any court mandates for bankruptcy.
Considerations
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Interested parties -- that is, creditors -- in a Chapter 7 case may petition the court to protest any debt discharge, or at least extend the case to give them more time to prove the debt should not be discharged.
Who Is Ineligible Under Chapter 7
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People who can afford to pay $100 a month toward reducing debt, or $6,000 over five years or who make above the median income for their area cannot file for bankruptcy under Chapter 7, but may file under Chapter 13, according to Lawyers.com.
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