Any debt that is discharged in a chapter 7, means that the creditor can never attempt to collect the money owed from the debtor. If a secured debt such as a mortgage is discharged in bankruptcy, the mortgage company cannot attempt to collect the money from the debtor. However, if the debtor does not pay the mortgage, the mortgage company is permitted to take the collateral and foreclose on the house.
If the debtor meets the criteria of a chapter 7 bankruptcy filing and everything goes perfectly, there is certain debt that will not be discharged (eliminated). This means that any creditor that is owed debt, which is non-dischargeable, may continue to collect the money from the debtor after the chapter 7 case is complete, as if no bankruptcy case was filed. Most of the type of debt that is non-dischargeable includes the following:
- most taxes, including, but not limited to, recently incurred income taxes, sales’ taxes, and taxes that an employer owes to the government that were withheld from employees;
- any debt that was incurred for the payment of taxes that cannot be discharged;
- domestic support obligations that are typically incurred in connection with a divorce;
- debts incurred from causing injury to another from operating a motor vehicle, while intoxicated;
- debts incurred by borrowing funds from certain pension plans;
- certain debt that is not properly listed on the petition;
- any debt, whereby the debtor specifically signs a Reaffirmation Agreement, which is approved by the court;
- student loan debt;
- certain debt due to a government, such as fines, penalties, forfeiters and criminal restitution debt;
- debt incurred by fraud;
- debt incurred by the willful and malicious injury to a person or property;
- real estate association fees that become due after the filing and prior to the transfer of the deed from the debtor to a third party.
Please note that there are numerous exceptions and variations of the above list.
NJ Bankruptcy Lawyer Robert Manchel can be reached at 1 (866) 503-5655 to explain how you may benefit from a chapter 7 case or if bankruptcy protection is applicable in your case.