Although most Chapter 7 bankruptcy filers will be able to get rid of qualifying debt, such as credit card balances, medical bills, and personal loans, some debts are nondischargeable. They aren't erased in Chapter 7 bankruptcy. Here's what you can expect in Chapter 7 bankruptcy.
Most debtors don't have any problem sailing through the Chapter 7 process. That said, getting a Chapter 7 discharge isn't a sure bet. Here are two barriers to debt discharge.
For a few of the 19 categories of debt, the creditor must successfully challenge the discharge of the debt during the bankruptcy case. If a creditor doesn't raise an objection, or if it does and the court disagrees, the debt will be discharged.
In Chapter 7 cases, the debtor doesn't have an absolute right to a discharge. To receive a discharge, debtors must fulfill the requirements of bankruptcy law. (11 U.S.C. § 727.)
If the debtor fails to follow the rules or doesn't provide mandatory information, a creditor, the bankruptcy trustee, or the U.S. trustee can object to the entire Chapter 7 discharge. For instance, the court can deny a Chapter 7 discharge if you:
If successful, the debtor will remain responsible for all obligations.
Some types of debts are deemed nondischargeable without the need for a hearing if they fall within one of a list of prescribed categories. Unless the debtor can demonstrate extraordinary circumstances, the following debts are automatically nondischargeable:
While all of these debts are nondischargeable in Chapter 7, some can be eliminated in Chapter 13. Find out which debts are dischargeable in Chapter 13 but not Chapter 7.
Some debts aren't automatically excepted from discharge. Creditors must ask the court to determine if they are dischargeable or not. If the creditor doesn't raise the dischargeability issue or the creditor raises the issue, but the court doesn't agree, these debts will be discharged.
If you're considering bankruptcy as an option for dealing with debt, you'll want to learn more about how it works, what it can and cannot do, and who is eligible.
Did you know Nolo has been making the law easy for over fifty years? It's true—and we want to make sure you find what you need. Below you'll find more articles explaining how bankruptcy works. And don't forget that our bankruptcy homepage is the best place to start if you have other questions!
Our Editor's Picks for You |
|
More Like This |
Which Debts Are Discharged in Chapter 7 Bankruptcy? Debts Discharged at the End of Chapter 13 Bankruptcy How to File for Bankruptcy in Your State |
What to Consider Before Filing Bankruptcy |
What Not to Do Before Bankruptcy |
Helpful Bankruptcy Sites |
We wholeheartedly encourage research and learning, but online articles can't address all bankruptcy issues or the facts of your case. The best way to protect your assets in bankruptcy is by hiring a local bankruptcy lawyer.
Take our bankruptcy quiz to identify potential issues and learn how to best proceed with your bankruptcy case. |