When you file to have your debts discharged under a Chapter 7 bankruptcy , you might expect things to be approached in a straightforward manner. After all, once your bankruptcy attorney has filed for a Chapter 7 bankruptcy, it only takes a few months for the courts to look over your debts, decide what can be discharged, and to approve your case. Once the approval is made, you're free to enjoy a financial fresh start. Or are you?
Not All Dischargeable Debts are Automatically Eliminated
The truth is that not all dischargeable debts are automatically eliminated from your financial slate. In fact, many bankruptcy courts are quick to consider some debts non-dischargeable, especially under certain circumstances. Wondering when dischargeable bankruptcy debts can't be eliminated? Take a look at these special circumstances:
Debts Incurred By Fraudulent Activity
If you have multiple debts that were incurred through fraudulent activity (such as lying on a credit card application or writing a bad check), then you'll quickly find that bankruptcy courts won't discharge these debts.
Debts Incurred By Malicious Activity
If you incurred a personal debt through malicious activity, bankruptcy courts won't discharge the debts under a Chapter 7 ruling (or any ruling, for that matter). For example, let's say that you purposefully damaged another person's car, and a civil court ruling required you to pay off the debts incurred by your actions. A Chapter 7 bankruptcy would not help in this situation, as federal law will require you to continue paying off that debt.
Debts From Embezzlement and Other Illegal Activities
Illegal activities such as embezzlement, breach of trust or contract, and theft are certainly not looked kindly on by any court, especially bankruptcy courts. Therefore, if any of your debts were incurred as a result of these illegal activities, you'll be required to continue paying them off even after having a Chapter 7 bankruptcy petition approved.
Debts Arising From Divorce Decree
You already know that child support payments and alimony payments cannot be discharged under any type of bankruptcy. It's important to note that under a Chapter 7 bankruptcy, the bankruptcy courts cannot discharge any other debts that are determined in the divorce decree. Therefore, don't look to bankruptcy as an option for getting out of your divorce settlement.
The best thing you can do is to hire a knowledgeable and experienced Chapter 7 bankruptcy attorney for your petition. That way, you can ensure that any potentially dischargeable debts are eliminated quickly and without error.