Which Debts are Not Discharged During Bankruptcy?

  • Chapter 7 Bankruptcy

Which Debts are Not Discharged During Bankruptcy?

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When you file for bankruptcy, there are certain debts that are either liquidated (Chapter 7 bankruptcy) or reorganized (chapter 13 bankruptcy); however, Dallas based bankruptcy law firm Recovery Law Group informs that some debts cannot be discharged completely.

Some debts are non-dischargeable unless the debtor can prove to the court that payment on these debts will cause them to undergo extraordinary stress. These debts can include any debt which the bankruptcy filer failed to include in their bankruptcy petition. other debts which are always non-dischargeable include child support, alimony, payroll taxes, federal tax liens, fraud penalties, student loan, homeowner Association fees as well as injury caused by DUI.

A chapter 7 bankruptcy discharge might be denied if the debtor does not follow the bankruptcy court’s procedures and laws. This might result in the dismissal of the bankruptcy petition, which will not give you any discharge on debts. Filing for chapter 7 bankruptcy does not mean that you will get a discharge of all your debts. You are required to follow provisions of Bankruptcy Code, especially section 727(a). not following the rules might give probable cause to any creditor or the bankruptcy trustee to object to your chapter 7 discharge.

Discharge can also be denied in case of Chapter 7 bankruptcy, if the debtor fails to provide required tax documents, failed to complete personal financial management course, tries to defraud the creditors by hiding or transferring assets. Additionally, if the debtor commits perjury, destroys evidence or is found violating any court order then also discharge can be denied. Creditors also have the option of objecting to debt discharge. They can file a motion against the discharge of a debt, which would have been discharged otherwise. Sometimes, if the court does not agree with the issue raised by the creditor, they might go ahead with the discharge.

Usually, the purchase of luxury items using credit cards is the most debated issue between creditors and debtors. Any goods purchased using a credit card for more than $650 (owed to a single creditor) within 90 days of bankruptcy filing can be put under scrutiny by the creditor. The creditor will be able to prevent discharging of these types of debts unless the debtor can prove that they intended to honor the commitment, or the goods were essential and not luxury items. Moreover, the creditor can also convince the court for not discharging the debt, if the debtor received a cash advance of more than $925 within 70 days of the bankruptcy filing.

Bankruptcy procedure can be quite confusing for the layman. To know which of your debts can be discharged during bankruptcy, you should contact bankruptcy attorneys at 888-297-6023.