Chapter 7 is advocated as one of the best Chapters to release a good amount of debt with zero obligation after the bankruptcy process. However, this might not hold true under some scenarios. The filer might have to continue to pay out some of the debts during and after Chapter 7 bankruptcy. To assess if Chapter 7 could actually kill all your debts or not, it is best to analyze some of the debts, you may still be obliged for even after filing for Chapter 7 bankruptcy. For more information relating to bankruptcy and Chapter 7, log on to Recovery Law Group.
- Any debt that has been incurred after filing for bankruptcy
Any form of expense, debt, or bills that have been incurred after the filing of a bankruptcy will still hold you liable for clearing the same. This is referred to as a post-petition debt in legal terms. Some of the common debts that could fall under this category can be listed as follows-
- Child support or alimony
- Utility bills, taxes, insurance payments
- Rent or lease dues
- HOA or condo fees
Some of these expenses that have been incurred before the bankruptcy filing will also not be wiped off. Child support, alimony, and taxes debt will usually not be discharged and are only wiped off under rarest of rare circumstances. The debts which will be wiped off will again depend on the bankruptcy court’s judgment.
- Secured Debts
Debts which have been secured by an asset or collateral is referred to as secured debts. These are debts which are usually of high dollar value. Some of the common examples of secured debts can be listed as follows-
- Home mortgage or home equity line of credit
- Car loan
- Business property loan
The discharge or release of these debts depends on whether you agree to surrender the collateral or security of the debt. If you intend to keep the asset, you might have to pay off the debt in full. You might still get part of your debt released if you prove to the court how essential the particular asset is and impacts income generation. If you decide to keep the asset and pay off the debts, you cannot afford to miss the payment then. During bankruptcy, the lender can pass a motion and exercise lien on the asset or can directly access the asset after the bankruptcy court has closed your bankruptcy case.
- A brief break for your non-dischargeable debts
Some debts like student loans, taxes, government dues/penalties/fines, etc., can freeze when you file for bankruptcy. You get a brief respite from those dues till your bankruptcy case is in the progress with the bankruptcy court. However, this by any means does not make you less accountable or liable for all dues during the bankruptcy phase as well as before and after bankruptcy. It just gives you a breather to re-assess and get things together.
Voluntary debt repayment
There are scenarios when you had like to pay off some of the debts. This usually happens for debts owed from related people, medical practitioner, or a particular lender who has supported the most. To pay off debts, you might not be able to use any of the nonexempt assets that are to be liquidated for repayment to lenders under Chapter 7 Bankruptcy. The best approach to voluntary debt repayment would be to initiate such payments after the bankruptcy case is closed by the court. To know more such important and smart tips, call 888-297-6203 now!