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Will All My Debts Be Eliminated by Bankruptcy?
That depends on your debts. Not all debts are cancelled by bankruptcy. If you complete a Chapter 7 Bankruptcy most of your debts will be discharged but some types of debt will remain, even after the bankruptcy process.
If a debt is discharged, then a creditor can no longer initiate or continue any legal action to attempt to collect the debt. However, non-dischargeable debts can still be pursued and those creditors can initiate (or continue) any legal action against you to attempt to collect the debt even after your bankruptcy discharge has gone into effect.
Types of Debts That Remain After Bankruptcy
You will continue to be liable for certain types of debts that are not paid as part of your Chapter 7 case.
Debts not discharged include:
- Debts for maintenance or alimony and child support
- Certain taxes
- Debts for certain educational benefit over-payments or loans made or guaranteed by a governmental unit
- Debts for willful and malicious injury to another entity or to the property of another entity
- Debts for death or personal injury caused by the operation of a motor vehicle while you were intoxicated from alcohol or other substances
- Debts for certain criminal restitution orders (See 11 U.S.C. § 523(a) for detailed information)
- Debts for money or property obtained by false pretenses, debts for fraud or defalcation while you were acting in a fiduciary capacity
Conditional Discharge of Debts
Some debts will be discharged unless conditions are met by the creditor. For instance, debts for willful and malicious injury by you to another entity (or to the property of another entity) will be discharged unless that creditor files for and prevails in an action to have such debts declared non-dischargeable. See 11 U.S.C. § 523(c)
; Fed. R. Bankr. P. 4007(c)
for more information.
Can Debt Discharges Be Reversed?
The court may revoke your Chapter 7 discharge on the request of the trustee, a creditor, or the U.S. trustee if the discharge was obtained through fraud. Discharged debit may be reinstated if:
- You acquired property that is property of the estate and knowingly and fraudulently failed to report the acquisition of such property or to surrender the property to the trustee.
- You (without a satisfactory explanation) make a material misstatement or fail to provide documents or other information in connection with an audit of your case.
See 11 U.S.C. § 727(d)
for more information on these situations.
Common Debts That Survive Bankruptcy
The most common of the above non-dischargeable debts are child support/maintenance, student loans and tax debts. Those debts can not be discharged as part of your bankruptcy and you will still owe them once a bankruptcy has been concluded. Having non-dischargeable debts, will not stop you from being able to file for bankruptcy, but you should be aware that you will still owe those debts after your bankruptcy is completed. In addition, any debt that is reaffirmed as part of the bankruptcy will still be owed at the conclusion of your bankruptcy.
Need Experienced Bankruptcy Help?
Ultimately, what is and what is not dischargeable by bankruptcy depends on the Federal Statutes and Regulations which control the bankruptcy process. If you have specific questions regarding bankruptcy or how a debt will be addressed during or after filing for bankruptcy, an experienced bankruptcy attorney can help.
Contact us online or call (859) 209-2101 to schedule an apportionment to speak with an experienced bankruptcy lawyer at Hurst & Hurst Law.