Chapter 7 Bankruptcy and Non-dischargeable Debts

An individual who files for a bankruptcy case would like to have as many debt discharges as one can. In general, the rule says that financial obligations are discharged if they were made before a debtor has filed for Chapter 7. Filing for bankruptcy eliminates a debtor’s liability on a debt or claim. But some financial obligations that endure bankruptcy such as secured loans or debts.

There are exclusions of the debts discharged by formally applying for Chapter 7. A number of creditors will pursue their claims by formally applying for exclusions to the bankruptcy court. The creditor could make a claim that the financial obligation was obtained by fraudulent representation or other methods of dishonesty. If this happens, the debtor will have to repay the debt which would contradict the very object of filing for Chapter 7.

Once the person’s debts have become extremely burdensome, Bankruptcy Code wipes out liabilities, however, it also provides certain special exemptions to make sure that this alleviation is granted only to the “honest but unfortunate debtor.”. The Bankruptcy Code has some debt discharge exceptions. These are divided into two groups: non-dischargeable debts due to the debtor’s transgression and non-dischargeable debts due to public policy.

Samples of financial obligations that are not dischargeable because of unjust action are those created by means of fraud or any form of crime. The non-dischargeable debts attributable to public policy include educational loan, child support, alimony, customs duties and taxes, government fines, penalties, and forfeitures, unscheduled claims, and certain debts that survive a preceding bankruptcy case. These two types of exceptions will not make a debt dischargeable so the financial obligation continues.

Dischargeability of debts in the presumption of fraud was stretched out in terms of using credit cards by invoking that any luxury good or service purchased using credit card that amounts to more than $500 within 90 days prior to bankruptcy filing is non-dischargeable. There are instances wherein the courts have ruled certain credit card debts to be non-dischargeable because of the implication of using the credit card, which is the intention to pay the purchases made.

Aside from creditors pursuant to 523, the pursuant of U.S.C. 727 by a creditor or the trustee may result in a court?s disapproval of a final discharge in bankruptcy, regardless of its nature, if the person applying for bankruptcy is not able to to satisfactorily clarify how any asset was lost, violates court orders, withholds estate records, acts or forbears an act to be able to get an advantage, intentionally makes a wrongful claim, oath, or account in a bankruptcy case, fails to preserve or forges financial report, and hides or destroys the debtor’s property subsequent to filing Chapter 7 or within the period of one year before the date of filing, in order to defraud or hinder a creditor. Last of all, a Chapter 7 case may be dismissed by the court as a result of the debtor’s unscheduled claims, unpaid obligatory payments or fees, or causing unreasonable delays of the proceedings.

Chapter 7, Chapter 11, Chapter 13, if these topics are overwhelming try San Antonio Chapter 13 Bankruptcy. There you’ll find information provided by Ama Guzo that describe these topics to you personally on his recommended site, San Antonio Bankruptcy Attorney.

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