Filing for bankruptcy is a way for people with substantial debt to get a fresh start. Chapter 7 bankruptcy helps remove many debts completely and Chapter 13 bankruptcy may completely eliminate debt and restructure other debts.

Not all forms of debt can be eliminated through a successful bankruptcy filing. During a bankruptcy proceeding, it is crucial that you are honest and cooperative. Having an experienced bankruptcy attorney on your side can make the difference between having your allowable debts discharged (eliminated) and having your bankruptcy discharge denied.

Debts That Cannot Be Discharged

Not all debts can be discharged in a Chapter 7 or a Chapter 13 filing. Some debts include:

• Debts that are incurred through fraud, misuse of funds, larceny or embezzlement: Filing for bankruptcy will not eliminate debts that arise out of illegal activity.
• Debts incurred under false pretenses or false financial statements: Bogus representation and fraud may lead to debts that cannot be discharged.
• Student loans: In most cases, student loans cannot be discharged.
• Alimony and child support: All alimony and child support will not be removed by filing for bankruptcy.
• Some cash advances: Cash advances made shortly before filing for bankruptcy may need to be repaid.
• Certain tax debts: Depending on the circumstances, certain tax debt may be discharged. New Jersey tax debt and IRS tax debt are treated the same.
• Orders of restitution: Filing for bankruptcy will not eliminate debts that are owed to a victim that is ordered by a judge as a result of criminal activity.
• DUI accident claims: If you are found liable for an injury accident when you were under the influence of drugs or alcohol, the resulting accident claim will not be eliminated through bankruptcy.

Fraudulent Debt

If the court deems that a debt is acquired through fraudulent means, it will not be discharged. An example of fraudulent debt is the act of purposely driving up your credit card debt shortly before you file for bankruptcy. Your credit card activity over the last 90 days prior to the bankruptcy filing may be taken into consideration.

Another example of fraudulent debt involves loan applications. Lying on a loan application will make you liable for that loan without the opportunity to have it discharged. While bankruptcy laws serve to protect those who are in financial trouble, they also protect creditors from fraudulent activity.

Please note that debt which is denied a discharge due to fraudulent activity is extremely unlikely. Also, a debtor is presumed to have not committed fraud. Unless the creditor files a separate legal action, through the bankruptcy case, requesting that the debt be denied a discharge, the debt will be discharged (eliminated).

Debts That Can Be Discharged

The number of debts that can be discharged by filing for Chapter 7 bankruptcy is significant, which is the reason why bankruptcy is a worthwhile option for people with substantial personal debt. Medical bills, personal loans, credit card debt and certain tax penalties, may be eliminated in a Chapter 7 bankruptcy.

Contacting a Bankruptcy Lawyer

If you have debts that you will be unable to repay in the near future, please do not hesitate to call Robert Manchel, Esq., at 866-503-5655. Our New Jersey bankruptcy lawyers will offer a no-cost evaluation of your case and help you determine the best course of action.