Depending on your situation, filing for Bankruptcy under Chapter 7 and Chapter 13 can eliminate the legal obligation to pay some or all of your debts. This is called a “discharge” of your debts.
A bankruptcy “discharge” renders certain general unsecured debts permanently unenforceable against the debtor, enabling the debtor to receive a “fresh start.” I.e., the debtor is released from personal liability for discharged debts, and creditors can no longer take any action against the debtor to collect them. The types of debts most often discharged include credit card debts, medical debts, commercial contract debts, and certain claims for breach of contract or negligence. Indeed, many debtors’ primary purpose in filing for bankruptcy is to obtain a discharge of debts.
Under certain circumstances, creditors can object to the debtor’s discharge or request that it be revoked. A good attorney can be the difference in whether or not a debtor receives a successful discharge.
However, there are limitations: Only individuals are eligible for a discharge in Chapter 7 and 13 bankruptcy cases. Corporations and partnerships are eligible to receive a discharge in Chapter 11 cases under certain circumstances, but cannot receive a discharge in Chapter 7 or 13.
Certain debts cannot be discharged at all and will remain enforceable against the debtor even if the debtor receives a bankruptcy discharge. These debts include domestic support obligations, education loans without a showing of undue hardship, certain unpaid federal and state taxes, debts owed to governmental agencies, and criminal fines and restitution.
Certain debts are dischargeable only in Chapter 13 cases, including: (1) Willful torts, (2) Fines, Penalties, forfeitures payable to a governmental unit, (3) Debts resulting from wrongful actions in connection with commitments owed to depository institutions, (4) Restitution payments resulting from bankruptcy crimes, (5) Debts incurred to pay nondischargeable taxes, (6) Election law fines, (7) Nonsupport debts to spouse or children arising out of marriage dissolution or separation, (8) Post petition condominium fees, (9) Prisoners’ court costs and filing fees, (10) Loan repayments to retirement plans, and (11) Debts based on securities fraud.
Also, you will not be entitled to a discharge if you any of the following are involved:
Property transfers, concealments, etc. within one year before filing the petition (or any time after the petition was filed) with intent to hinder, delay or defraud creditors.
Falsification /concealment of records, or failure to keep books and records relevant to the debtor’s financial condition.
Concealment of any claim, promise or information in the bankruptcy case.
Unexplained loss of assets.
Vokshori Law Group provides Bankruptcy assistance to individuals and businesses serving the entire Los Angeles County.
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