What Filing for Chapter 7 Bankruptcy Won’t Change

Though often a last resort, filing for bankruptcy may seem like not only a fresh start, but a breath of fresh air. After all, who doesn’t want their debts erased? And while there are many ways that declaring Chapter 7 bankruptcy can be a good solution to overwhelming debt and your second chance at financial stability, it’s important to understand which debts Chapter 7 bankruptcy will NOT wipe out. Because whatever kind of bankruptcy you file for, having clear expectations is essential.

What is Chapter 7 Bankruptcy?
Unlike the Chapter 13 payback method, Chapter 7 Bankruptcy has the unique benefit of cancelling or eliminating almost all of your debts, especially when it comes to unsecured debts like credit card and medical bills. During the process, debt collectors are prohibited from contacting you to collect debts. Once the process is completed, you will no longer be responsible for the debts discharged during the Chapter 7 bankruptcy process.

What debts does Chapter 7 Bankruptcy eliminate?
Individuals often turn to Chapter 7 bankruptcy because it often allows many assets to be kept, while also offering total forgiveness from many debts. In general, declaring Chapter 7 Bankruptcy can discharge debts owed from:

  • Credit card bills (including overdue and late fees)
  • Medical bills
  • Collection agency accounts
  • Personal loans from friends, family, and employers
  • Utility bills (past due amounts only)
  • Dishonored checks (unless based on fraud)
  • Repossession deficiency balances
  • Auto accident claims (except those involving drunk driving)
  • Business debts
  • Money owed under lease agreements (includes past due rent)
  • Civil court judgments (unless based on fraud)

However, its important to remember that each case is unique, and the above debts may or may not be able to be erased in every situation. In the case of any fraud or misconduct regarding these debts, they will not be discharged in any kind of bankruptcy declaration.

What debts does Chapter 7 Bankruptcy NOT eliminate?
While the debts that successfully declaring Chapter 7 bankruptcy eliminates can sound liberating, no kind of bankruptcy declaration means a totally blank financial slate. There are still many financial obligations and even some previous debts that the individual declaring bankruptcy remains legally responsible for. Understanding these obligations and debts is critical to avoiding devastating surprises and complicated legal issues down the road. Gaining clarity about what bankruptcy doesn’t erase might even help you decide if declaring bankruptcy is a good idea for you. Chapter 7 bankruptcy does not eliminate the financial obligation to debts such as:

  • Child support
  • Alimony
  • Personal injury debts, if alcohol or drug related
  • Most student loans
  • Traffic tickets
  • Tax debts

When considering if Chapter 7 bankruptcy is right for you, and how to set up your process for success, don’t hesitate to speak to the New Jersey bankruptcy specialists at the Law Office of Stuart M. Nachbar, P.C., because we always want to help you find the best possible path forward. Contact us now to learn more.

Law Office of Stuart M. Nachbar, P.C.
354 Eisenhower Parkway,
Suite 2025
PO Box 2205,
Livingston, NJ 07039
Tel: (973) 567 0954
Fax: (973) 629 1294

By |2019-02-13T17:27:30+00:00October 17th, 2018|Uncategorized|0 Comments

About the Author:

I have been representing clients of all types for over 20 years, working with personal injury clients, representing people before numerous Municipal courts throughout Bergen, Essex, Morris, Union, and Passaic Counties and assisting persons in the Superior Court in complex litigation throughout the state.

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