Someone who is granted a declaration of Chapter 7 bankruptcy federally allows certain debt to be discharged and a clean financial record instituted. Creditors are paid through the nonexempt assets of the bankruptcy estate and the exempt assets are usually left alone unless they need to be included. The person who files is called a debtor.
What Can be Discharged Under Chapter 7 Bankruptcy?
The court order that releases the debtor from the dischargeable debts also orders creditors to stop contacting the debtor for collections. The debtor is completely released from obligations to dischargeable debts. Some debts are not covered by discharge, however and some people cannot be allowed to file for chapter 7 bankruptcy.
The following types of debt are some, but not all debt that cannot be discharged by filing for Chapter 7 bankruptcy:
- Alimony, child support and other maintenance obligations cannot be discharged with little to no exceptions.
- Intentional or malicious injury of property and/or person(s) with a resulting fine cannot be discharged.
- Student loan debt–unless you can prove that paying for these debts would cause you undue hardship.
- Death or personal injury penalties as a result of DUI.
- Debts from a previous bankruptcy case.
- And more…
It is worth considering filing for bankruptcy at all if the majority of your debt is considered not dischargeable. You should seriously try debt counselling or other methods to mitigate debt. If you visit a bankruptcy lawyer they can help you determine if bankruptcy is right for you and whether there are other services you can take advantage of. This is a serious matter, especially if bankruptcy proceedings cannot help you. Your options may be limited. Be sure you consult a bankruptcy lawyer to avoid wasting money at the beginning.
Who can file for Chapter 7 Bankruptcy
Anyone can file for bankruptcy that is a citizen of, lives in, or has real estate in the country. However, if you have declared previously in a case of bankruptcy that was dismissed or within the last eight years, then you will probably be denied with little exceptions. If the bulk of your debt is included in a list of debts that are not allowed to be discharged, you may have a problem and filing for Chapter 7 bankruptcy may not be considered the best option for you.
If you have already been involved in a case, it may not be wise to file again as you will possibly be denied. If you have debt that was not discharged from your previous case, you may not be able to file again.
Hiring a Competent Bankruptcy Lawyer
This is not required to pursue a case but is highly recommended! Please do yourself a favor and consider hiring an experienced Chapter 7 bankruptcy lawyer Memphis, TN trusts so you can go through the smoothest process possible–the first time.
Call for a free consultation to clear up the many factors of your unique case and be sure that filing for bankruptcy is the right choice for you.
Thank to our friends and contributors from Darrell Castle & Associates, PLLC for their insight into Chapter 7 bankruptcy.