It is common knowledge that filing for Chapter 7 bankruptcy makes your debts go away. But it is not that simple. All your debt is not discharged once you have successfully filed for bankruptcy. There are several debts that remain that you have to pay regardless of declaring bankruptcy.
Any state or federal taxes that you owe will not be eliminated and must be paid in full. Parents who are financially responsible for their child and pay child support regularly are not dissolved of their duty and have to pay it. Court fees, lawyer fees and any state fines accumulated are not excused after Chapter 7 bankruptcy. Certain debts like personal injury damages and pension plans are also not discharged by the court.
A controversial topic during Chapter 7 debt elimination is that of student loans. According to the law, student loans are not eliminated from a person’s debt after Chapter 7 bankruptcy. However, if the judge feels that paying off these loans is making life difficult for the debtor, the loan might be discharged. It is difficult to clarify what kind of hardships are enough to get a student loan discharged. The debtor must apply for a hardship discharge of the student loans separately. The judge decides whether to grant the discharge on the basis of the debtor’s income, the duration of the repayment period and the amount of effort already made to pay off the loan.
If you are planning to file for Chapter 7 bankruptcy, it is advisable to hire an experienced attorney. The attorney will guide you through the process and help you file for a hardship discharge in case you need to get your student loan discharged as well.