In layman’s terms, the goal of filing a Chapter 7 bankruptcy is to give yourself the opportunity to have a fresh start, without the burdens of your crushing debt. This is accomplished through a process called “discharge”. Discharge is the actual process of wiping away many of the debts that you owe – but not all of them. There are some debts that are not dischargeable, and some creditors that are guaranteed to get the money that they are owed.  Much of understanding the specific impact of filing for Chapter 7 bankruptcy lies in evaluating all of the debts that you have and identifying which can be eliminated. If too many of your debts cannot be discharged using Chapter 7 bankruptcy, an experienced attorney from Reinherz Law can guide you to an option that is more appropriate for your needs.

For most people facing overwhelming debt, eliminating those items that are considered dischargeable provides dramatic relief. Dischargeable debts include credit card debts, personal loans, payments on motor vehicles and on your home.   This generally represents the majority of an individual’s debt. However, even debts that would normally be considered dischargeable may not be denied if you were fraudulent in your representations to the court, or if you did not follow all of the court’s rules. Additionally, there are 19 specific types of debt that are not dischargeable, and if you have any of these types of debt, creditors will be able to continue to pursue collection proceedings against you.

The reasons that you may be denied discharge for normally dischargeable debts include failing to provide appropriate documents, failing to complete the required course on financial management, and purposely trying to hide or transfer property in order to try to defraud your creditors. You will also continue to be responsible for the following debts:

  • Any debt that you do not include on the list provided with your bankruptcy petition unless you can show that your creditor was aware of the bankruptcy filing
  • Specific taxes that you owe
  • Debts that you owe to an ex-spouse for alimony or child support
  • Debts to government agencies for penalties or fines
  • Most student loan debts
  • Debts owed to plaintiffs in personal injury cases where you were driving a vehicle while intoxicated
  • Debts owed to some tax-advantaged retirement plans
  • Debts for homeowners’ association fees and similar condominium or housing fees
  • Attorneys’ fees owed in child custody and child support cases
  • Fines and penalties owed to courts

There is a possibility that some dischargeable debts can be deemed nondischargeable if the creditor files an objection. These debts include those for luxury goods incurred within 90 days of filing; cash advances received within 70 days of filing for bankruptcy; debts obtained by fraud; and debts incurred with the intention of causing injury to another.

For more information on exactly what impact filing for Chapter 7 bankruptcy will have on you, contact the attorneys at Reinherz Law today. We are here to help.


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