As you probably know, filing for chapter 7 bankruptcy protection is often a fairly efficient way to relieve yourself of burdensome debt. Don’t get me wrong, there are serious consequences associated with filing for bankruptcy – these should be adequately understood and considered before filing.
However, as long as you are realistic about your debts and understand which debts may or may not be repaid, you will most likely get the results you seek. In the end, bankruptcy almost always gives my clients the fresh start they want. And for me? Happy clients = happy lawyers in my book.
However, to achieve this favorable outcome, it is absolutely necessary to understand which debts cannot be repaid under chapter 7 bankruptcy protection.
Criminal Fines and Related Debts: Fee and non-fee courts ordered judgments relating to criminal activity cannot be waived. This includes judgments involving the death or personal injury of others and those stemming from your own negligence or criminal activity, including those stemming from DUI.
Student Loans: This is a common point of frustration, but in 99.99% of cases I’ve seen (disclaimer: I made up that number, but in my own experience) student loans were not repaid. The technical jargon is that they can only be released when the payment causes undue hardship to the debtor or their dependents.
Fraudulent Debt or Dishonest Activities: This is basically an umbrella category that applies to all cases of fraud or fraud, but is most commonly seen in cases of bankruptcy fraud. An example is a debtor who maximizes the remaining credit card in the days before submitting an application. I should note that this includes attempts to pay off debts that are secured by unsecured funds, and thus can be repaid. This means not taking a down payment on a credit card, to pay for your child support and support.
Child Allowance & Support: Talking about child support and support, it can’t be separated. This includes provisions made for future distribution of assets, including QDRO. Stay tuned for articles in the coming weeks regarding filing for bankruptcy to pay off debts accrued from property settlements in divorce proceedings.
Tax payable: This one is a little tricky, but generally applies to debt incurred in the last 3 years.
Unreported Debt in the Application: This is a big problem. I will usually access your credit report, and use the information provided to report your debt on a bankruptcy petition. However, not all debts show up on your credit report and not all attorneys choose to use this method and. Therefore, I tell all consultancies on this point. I hate to see you come out of bankruptcy, only to realize that you are still stuck in one or more major debts.
That’s all for now, but I’ll be updating this list as time goes on. As always, bankruptcy is easier (and generally far more profitable) when left to the professionals. If you are in the Phoenix area and need a qualified Arizona bankruptcy attorney, feel free to contact me to arrange a free bankruptcy consultation.