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Jefferson Hanna Law

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Considering applying for bankruptcy can often be an overwhelming and confusing decision. Whether you are confused about the benefits and drawbacks of the various chapters and processes or don’t know if it is the right time to file, hiring an attorney to help you through the questions and possible roadblocks is a wise place to start.

First and foremost, Chapter 7 bankruptcy is designed to give those who have found themselves in insurmountable levels of debt an avenue for relief and a chance at a fresh start. Harassment from creditors and other organizations will be put on hold, and if everything is completed correctly, you will come out on the other side with a clean financial slate. However, the path to reach this goal is complex and requires in-depth knowledge of the guidelines and procedures for Chapter 7 Bankruptcy in Middletown, CT.

What Is Discharged Under Chapter 7 Bankruptcy?

There are a couple of fundamental points to understand when beginning to consider filing for bankruptcy. First is the types of debt that may or may not be discharged. Primarily, an amount of debt will fall into one of two categories – dischargeable and nondischargeable. Dischargeable debt will be more or less erased upon completion of the Chapter 7 Bankruptcy, while nondischargeable debt will not be.

These two categories are then broken down into secured and unsecured debt. The general rule of thumb is that most unsecured debts are dischargeable under Chapter 7, while only some secured debts will be. Examples of unsecured debt include medical and utility bills, unpaid rent, credit card debt, and other various personal loans. In addition, unsecured debt denotes that there is no collateral promised to the creditor upon nonpayment of the debt.

On the other hand, secured debt is debt in which the creditor will seize the property bought with credit if the debtor fails to pay the debt over the agreed-upon time. The specifics of the types of debt that can be discharged can be complex, and there are many exceptions and specific situations to consider before taking generalizations found online for a fact. If you are unsure, it is always best to consult a Chapter 7 Bankruptcy attorney before taking any action.

Income tax debt can also be discharged under a set of conditions that remain specific to the jurisdiction in which bankruptcy is being filed. However, there are several federal guidelines that hold true throughout the country.

What Cannot Be Discharged Under Chapter 7 Bankruptcy?

While Chapter 7 Bankruptcy aims to give the debtor a clean slate upon completion of their bankruptcy obligations, there may still be some debt that cannot be discharged. The previously discussed categories offer a general rule of thumb. However, there are a few particular categories that will generally remain untouched even after a bankruptcy is finished.

One of the most asked about types of debt that people may find themselves falling behind on is student loan debt. This debt may fall into the unsecured category, but debtors will typically still be required to pay even after the conclusion of the rest of the process. While there are a few situations in which it can be discharged, namely if the debtor can show that they will remain unable to pay the loan in the future, these situations are situation dependent. Therefore, they will require the help of a professional to examine.

Additionally, debt resulting from fraud cannot be discharged along with debt incurred through court judgments or other legal settlements. Therefore, the debtor will remain obligated to pay these debts after the conclusion of the bankruptcy.

The next category of nondischargeable debt merges into the question of what property is exempt from liquidation under Chapter 7 Bankruptcy, but that is the topic of an entirely different question. Still, luxury goods purchased within a time limit before the bankruptcy or any other advances that meet a certain value threshold.

These debts cannot be discharged as it is viewed by the court that the debtor did not intend to pay the debt to begin with. Since the debt was incurred within a number of days so near to the date of filing for Chapter 7 Bankruptcy, it may appear that the debtor was planning to file for bankruptcy and had the impression that the debt would be discharged, so the debtor chose to take on the additional debt anyways. However, that is not the case.

What To Do If Considering Filing For Chapter 7 Bankruptcy

Regardless of the situation or previous progress or decisions made regarding filing for bankruptcy, it is critical to get in touch with a Chapter 7 Bankruptcy Attorney as soon as possible. Not only will you find the knowledge and resources to answer your question but the support you need throughout the process as well. Mistakes made during bankruptcy proceedings can be costly and severely detrimental, so call Jefferson Hanna Law in Middletown, CT, as soon as possible to get started.

Jefferson Hanna, III

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