Chapter 7 bankruptcy offers debtors who are in dire financial straits an opportunity to discharge a large amount of their debt, meaning they are no longer deemed legally responsible for repaying that debt. However, Chapter 7 bankruptcy does not allow a person to discharge all of their debts. Only certain debts, known as dischargeable debts, can be forgiven, while others, known as non-dischargeable debts, must still be paid.
According to the United States Bankruptcy Code, only certain types of debt may be discharged. The following represent some of these classes of debt:
For a variety of reasons, there are some debts which are not able to be eliminated through bankruptcy. Though there are others and there are some exceptions to the types of debt listed below, these may be regarded as generally unlikely to be discharged:
Though it is frequently unnecessary, in some Chapter 7 cases an individual or business will be required to expose some of their assets to bankruptcy sale in order to generate proceeds with which to pay creditors. An experienced attorney can frequently insulate most of a debtors possessions from this, however.
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