Dealing with debt is not easy; however, there are ways and mechanisms one can address these matters. Take, for example, Chapter 7 bankruptcy, This is often referred to as liquidation bankruptcy. This is because the Chapter 7 process requires an individual sell off, or liquidate, a significant portion of his or her assets in order to pay off creditors. There are some exemptions to this liquidation so that debtors don’t have to start over from scratch post-bankruptcy. However, as those individuals who successfully complete the Chapter 7 bankruptcy process move on with their lives, they may be surprised to find that they still owe some debts. This is why it is critical to fully understand the effect of a given bankruptcy option before pursuing it.
Generally speaking, Chapter 7 bankruptcy allows for the discharge of most debts. But there are some debts that either cannot be discharged or are very difficult to discharge. Child support arrearages and spousal support, for example, cannot be written off through Chapter 7 bankruptcy. Also, debts that are not listed on the initial Chapter 7 filings are ineligible for discharge, which shows just how important it is to be thoroughly detailed from the get-go.
There are other debts that remain unresolved after Chapter 7 bankruptcy. Taxes, court fees, judgments from personal injury lawsuits and even some pension plan debts must still be paid. Student loan debt can be discharged, but it is extremely difficult to do so. In order to succeed in discharging student loan debt, one must show that it caused undue hardship. It’s worth noting, too, that many debts derived from divorce settlements remain even after successful bankruptcy.
Even though some debts may remain after successfully seeking bankruptcy, those who go into the process fully informed come out with the debt relief that they sought, which is oftentimes quite significant. Chapter 7 bankruptcy isn’t right for everyone, though, and other bankruptcy options are available. That is why those who are facing insurmountable debt may want to discuss the matter with a knowledgeable legal professional before proceeding with any type of filing.