Instead of establishing a repayment plan, as in Chapter 13 bankruptcy, the purpose of Chapter 7 bankruptcy is to completely eradicate your debt. In Chapter 7 bankruptcy, you are required to surrender all non-exempt assets in order to satisfy as many of your debts as possible. In reality, however, the overwhelming majority of chapter 7 filers have few assets and are merely attempting to eliminate all of their debts.
Your most valuable assets, such as your home, vehicle, and certain domestic items, are typically insured up to a certain amount. Obviously, you won't be able to hold on to a Rolls-Royce while sticking it to your creditors, but the majority of people are merely attempting to keep their homes and vehicles while obtaining debt relief.
Unfortunately, not every type of debt will be eliminated when you declare bankruptcy. You should be aware of a number of nondischargeable debts. If you are truly concerned about eliminating unsecured debts such as credit card bills and medical expenses, then you have a good chance of doing so.
If your primary concern is student loans, unpaid income taxes, child support, or criminal fines, it is unlikely that you will be able to discharge these debts through chapter 7 bankruptcy. If you think about it, a great deal of this involves common sense. Congress has attempted to craft the bankruptcy laws so as to provide relief to citizens in need without allowing individuals to avoid paying criminal fines or child support.
What about student loan debt and taxes, though? Those are also relatively straightforward to comprehend. Congress wanted to encourage banks to lend to students so that more people, regardless of their financial situation, could attend college. Banks would be hesitant to make a loan if it could be canceled out in a future bankruptcy proceeding, so the law makes obtaining a student loan extremely difficult. You must demonstrate extreme hardship beyond what most people face when they declare bankruptcy, as well as the inevitability of your circumstances changing in the near future.
When it comes to taxes, it is not surprising that they are difficult to eliminate. Ultimately, we are all aware that taxes, like mortality, are inevitable, and the government will always seek to collect its due. There are certain circumstances in which your taxes can be eliminated, so you should consult an attorney about your situation. If a certain number of years have passed since the tax liability was incurred, then the tax liability may be discharged.
However, there are numerous intricate regulations, so exercise caution. For instance, if the IRS has already initiated collection proceedings against you, your taxes will likely not be discharged. Also, if you have never filed a tax return, the clock never started ticking, so it does not matter how many years have passed.""
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