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4 types of debt that may not be discharged in bankruptcy

There are many preconceived notions people have about filing for bankruptcy. You might associate bankruptcy with financial ruin and failure, or you could believe that filing bankruptcy will solve all your money problems. In reality, the truth lies somewhere between these two.

Filing for Chapter 7 bankruptcy protection is an aggressive means of helping people make a fresh financial. It can eliminate much of your debt, but there are limits. Certain debts cannot be, or typically are not, discharged in Chapter 7. 

For instance, some of the most common types of debt that remain after Chapter 7 include:

  1. Student loans: Though there are exceptions, discharging student loan debt is very difficult.
  2. Undisclosed debts: If the courts don't know about a debt, they cannot discharge it.
  3. Recent tax debt: Again, there are exceptions to this. Some tax debt, like unpaid federal income taxes, may be discharged, but certain criteria must be fulfilled.
  4. Unpaid child support: This is considered a priority debt and therefore not dischargeable.

If these are your only sources of debt, Chapter 7 bankruptcy may not be right for you. Under these circumstances, you might consider Chapter 13 bankruptcy or other methods of debt relief.

However, if you have other sources of significant debt, you might still want to consider Chapter 7 bankruptcy protection. Even if you have debt that remains, Chapter 7 can wipe out other sources of debt. Once you are no longer responsible for things like medical bills, credit card payments and unpaid utility bills, it can be much easier to pay off other debt and get back on track.

Assessing your options for debt relief, including bankruptcy, can be overwhelming and intimidating, especially when you are already dealing with mounting bills and collection calls. Thankfully, you have the right to work with an attorney who can help you examine your options and find the best solution for your situation.

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