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What debts can't be discharged?

A Chapter 7 bankruptcy might be your least-desired option, or it might be the answer you're looking for to get ahead financially. There are a few things that you have to know about this kind of bankruptcy, though, because it won't excuse you of everything you owe.

After you go through a Chapter 7 bankruptcy, there are still some debts that could remain unless you show unusual hardship. One of those debts includes student loans, which often make up a large portion of people's debt. These loans often can't be discharged unless you can prove that having to repay those loans would cause you and your dependents undue hardship.

Here's an example of undue hardship. If the loan payments are so high that you'd be unable to live at a minimum standard of living, then the court may allow the debt to be discharged. Additionally, your financial circumstances must be stable; that means that if you're going to be making more money in the future, you may not be able to prove that repaying your loans is impossible. Finally, you must have made an effort to repay your loans at some point. If you have deferred and never made a payment, then the court may not look upon that kindly.

Other debts that are not usually discharged during a Chapter 7 bankruptcy include government-imposed restitution, fines or penalties, federal or local taxes, state taxes, debts that are associated with accounts you did not include on your documentation, debts that were not able to be discharged in previous bankruptcies, debts owed for dues and fees related to owning a condominium and certain other debts. Your attorney can help you understand which of your debts will be left following your bankruptcy, so you can decide if it's the right choice.

Source: FindLaw, "Debts that Remain After a Chapter 7 Discharge," accessed Dec. 15, 2016

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