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What debts are not eliminated in Chapter 7?

Chapter 7 has enumerated several debts that are not eliminated in the filing. The most important or common one is that a student loans. Student loans are not eliminated in a Chapter 7 bankruptcy except in extreme hardship cases. An extreme hardship case end of line would be someone who is potentially disabled or ill who will never have the ability to repay that debt.

Another common, non-dischargeable debt in Chapter 7 is parking tickets. Parking tickets issued by a city or a municipality are non-dischargeable in chapter 7. Another non-dischargeable debt is recent taxes. Recent taxes are those taxes that have not been more than three years old and where the person has not filed a return on time for those years. Another non-dischargeable debt which is very common is child support or maintenance which is a payment owed to a spouse or former spouse. There are other non-dischargeable debts such as criminal fines, restitution, debts incurred by fraud. But typically those are less common.

Even though you have non-dischargeable debt, that does not mean that a Chapter 7 is not a good idea for you. For example, if you are someone who has parking tickets and student loans and approximately $75,000 worth of credit card debt and medical bills, chapter 7 is still going to make sense for you to file. By eliminating the dischargeable debt, you are in a greater position to be able to make payments on the non-dischargeable debt. And recall that non-dischargeable debt in certain circumstances such as child support and parking tickets and student loans can lead to further court action, suspension of driver's license and even incarceration if you fail to show up in court. So by all means, chapter 7 is still a good idea if you have a lot of dischargeable debt, and then you are in a better position to deal with your non-dischargeable debt.

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