Not all debts are forgiven with Chapter 7 bankruptcy

On Behalf of | Sep 22, 2017 | Firm News, Personal Bankruptcy |

Many Florida residents may have struggled to make a comeback from the depression. notes that debt is a common problem, even for those who have been fortunate enough to maintain their careers. Since 2003, income growth has not kept up with the cost of living. For example, although the median household makes 28 percent more now, the cost of food has gone up 36 percent.

According to United States Courts, although many debts can be relieved through bankruptcy, the Bankruptcy Code outlines specific debts that are deemed nondischargeable, meaning they will not be automatically removed should the filing be accepted. In a Chapter 7 filing, the applicant will still be expected to pay any debt that falls into the following categories:

  • Restitution, fees, fines or other penalties resulting from any criminal activity, injury to an individual or damage to another person’s property
  • Domestic support, such as child or spousal support
  • Debt acquired in a fraudulent manner
  • Some tax obligations
  • Student loans (except in rare occasions)

There are other debts that the applicant may be expected to pay such as fees on retirement plans or monthly homeowners association charges that are incurred after the date of the bankruptcy filing. While most consumer debt is automatically considered to be dischargeable, creditors can request that the courts review the debt owed to them and change it from dischargeable to nondischargeable. This can occur in cases where fraudulent information was given, creditors are omitted from the filing or items are purchased after the filing date. Bills from luxury items that are purchased in the three months leading up to the filing may also be left for the purchaser to pay back.