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Chapter 7 Bankruptcy

As with other, similar forms of legally granted relief, chapter 7 bankruptcy affords the possibility of having debts discharged by binding order of a court.

Some Types of Debt Cannot Always Be Discharged Through Bankruptcy

Pursuing chapter 7 bankruptcy can make a good deal of sense for individuals whose debts have accumulated to the point that paying them off has become unrealistic. While this move can easily enable a fresh start for someone who could use the relief, consulting with a bankruptcy attorney will almost always be advisable. One reason for this is that not all debts are normally discharged through this style of bankruptcy or others, and having a realistic view regarding what might be possible will make a suitable choice more likely.

The Avenues for Relief from Debt are Not Unlimited

As with other, similar forms of legally granted relief, chapter 7 bankruptcy affords the possibility of having debts discharged by binding order of a court. Not all debts, however, can always be dissolved in this way, with those of the following types regularly remaining even after bankruptcy protection has been granted:

Student loans. The federal government backs millions of loans issued every year to finance the educations of young Americans. In most cases, the debts that result will not be dischargeable in bankruptcy, the belief being that allowing this to happen would lead too many to use this option to avoid repaying. While being able to convince the court that a particular student loan imposes an "undue hardship" on the debtor can enable an exception, success is relatively rare.

Overdue taxes. Whether owed to the local, state, or federal government, taxes that have not been paid will also often remain owing even after bankruptcy protection has been granted. Once again, bankruptcy courts do have a bit of leeway, although they tend to be fairly reticent about exercising their discretionary powers of this and other kinds.

Debts accrued by fraudulent or illicit means. Bankruptcy courts also tend to look dimly upon debtors who used fraud or other underhanded means to convince creditors to lend to them. An obvious lie on an application for a loan or other type of subterfuge could be enough for a debt to remain owing despite bankruptcy protection being granted.

Attorneys are Ready to Help Clients Understand Their Options

With a number of other types of debt also frequently persisting through the bankruptcy process, debtors who receive informed advice tend to make better decisions about proceeding. While this style of bankruptcy can easily end up being the best possible choice for a particular person, it always pays to be realistic about what might be achievable given the individual's own situation.