What types of debts cannot be discharged via Chapter 7?

Commonly known as "straight bankruptcy" or liquidation bankruptcy, Chapter 7 bankruptcy is an option for many struggling with debt in Mississippi. Since many debts can be discharged under Chapter 7, many debtors will gravitate towards this option since repayment is not feasible. Still, it's important to know that not every type of debt can be discharged via Chapter 7 bankruptcy. As a result, those considering filing for this type of bankruptcy may wish to learn more.

Under Chapter 7, many common sources of overwhelming debt can be discharged; these include credit card debt and many types of medical debt. However, there are certain other forms of debt for which a debtor remains legally responsible. These include student loans, taxes and debts stemming from fraud or drunk driving. In addition, many types of debt related to family law are also non-dischargeable; these include child support obligations, alimony or spousal support and property settlements stemming from divorces.

Debtor's fraud is a complicated topic and one that is unlikely to affect most debtors. Still, it's helpful to know that debts related to fraud cannot be discharged via Chapter 7. For example, if a debtor has a large number of luxury purchases made on credit cards right before filing for bankruptcy, those debts may not be dischargeable due to suspicion of fraud.

Chapter 7 for individuals can offer profound debt relief to those trying to cope with financial challenges. If one files for bankruptcy, they may be able to make significantly more room in their budget for paying back non-dischargeable debts. For these types of debt, it may be beneficial to work with one's bankruptcy attorney to learn more about dealing with creditors and formulating repayment plans.

Source: American Bar Association, "Bankruptcy," accessed March 22, 2015

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