If you are like many in Ohio, the recent global events have raised concerns about your financial future. Business closures, work slow-downs and layoffs have filled many families with uncertainty. Perhaps you are among those who have maxed out your credit cards or depleted your savings to make ends meet during these unprecedented times.

Now you may be looking at your options for debt relief. If you have significant debt, you may be considering filing for Chapter 7 bankruptcy, a process that discharges many debts. While it may seem enticing to have your debts eliminated altogether, you may wish to learn more about the kinds of debts that are eligible for discharge under Chapter 7 and those that are exceptions.

Non-dischargeable debts

Certain debts are not eligible for discharge under Chapter 7 or other bankruptcy rules. These are priority debts that are not so easy to get rid of. Therefore, even if a court approves your Chapter 7 bankruptcy, you may still hold responsibility for paying any of the following debts:

  • Money you owe to your child or former spouse in support payments
  • Your mortgage or other liens on property
  • Most taxes, including Social Security taxes, income taxes, withholdings from employee taxes and any related penalties
  • Loans for any vehicles you wish to keep after your bankruptcy
  • Debt you charged on credit cards right before you filed for bankruptcy
  • Debt related to legal matters, such as fraud, larceny or personal injury accidents in which you were responsible for someone else’s injuries

Student loans are another type of non-dischargeable debt. However, in some cases and depending on how long ago you acquired the loan, convincing evidence that those payments are a hardship may result in the court approving a discharge. If you only recently graduated or stopped attending school, the court is not likely to discharge your student loan.

Why bother filing?

In most cases, bankruptcy will not affect your obligation to repay these debts. If a considerable portion of your debts involve these or other exceptions, you may wonder if bankruptcy can benefit you. However, many who are struggling with overwhelming debt find that the liquidation of dischargeable debts through bankruptcy, such as medical bills, credit cards and unsecured loans, may provide enough financial relief that they can manage payments for those exceptions.

It may be worthwhile to discuss your unique situation with an experienced attorney who can explain your options and guide you in the most appropriate method of seeking debt relief.

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