Chapter 7 bankruptcy is often entered into when people have their financial backs against the wall, so it is understandable that many of these same people want the fresh start that is the implied promise of a Chapter 7 to liquidate as much of their debt load as possible. And overall, that is what this form of bankruptcy protection is able to do: give people with few or no options left a chance to get back on their feet again.
No form of bankruptcy, however, and especially a Chapter 7, should be contemplated without a thorough understanding that while it can be a lifeline, it is not a cure-all. Many debtors come out of the petition process still owing some money, because for a variety of reasons the bankruptcy court will not necessarily be willing or even able to discharge every financial obligation.
The federal law that controls debt discharge is lengthy and can be difficult to understand by someone not well-acquainted with federal bankruptcy law. An encapsulation of how some debts may remain after the debtor completes a Chapter 7 may be helpful in this regard, and appears below.
- Debts owed to the government: taxes, fines, restitution amounts, penalties and court fees.
- Debts that were not included in the list of creditors when the petition was initiated, and debts that could not be discharged in a previous bankruptcy.
- Debts owed to others that are not subject to discharge as a matter of equity: alimony and child support, or damages awards connected to a drunk driving judgment.
- Student loans, absent a showing that repayment would be an undue hardship.
- Certain miscellaneous debts, such as ones related to condominium fees or pension plans.
- Debts that are either illegal, fraudulent, or otherwise representative of malicious acts or intentions of the debtor.
It may not be realistic to expect to leave a Chapter 7 bankruptcy with a blank slate when it comes to debts, but it is realistic to expect that a knowledgeable Ohio bankruptcy attorney will be able to help you to eliminate as many debts as you legally can.