In a chapter 7 bankruptcy, the debtor is able to “discharge” or cancel the obligation to pay certain debts. These debts typically include:
credit card medical bill personal loan deficiency balances car repossessed deficiency balances other personal property repossessed deficiency balances on home foreclosure certain tax debt student loans for which the debtor can prove a “hardship”
The real question is, what debt is going to survive the debtor’s attempt to discharge in chapter 7 bankruptcy?
The most common debts that don’t meet the discharge criteria are these:
debt incurred to pay non-dischargeable tax debt court imposed fines back child support and spousal maintenance debts owed as part of a marital settlement or division of debt decree in divorce proceeding loans owed to a pension plan student loans certain tax debt debts for injuries or death related to drunk driving debt incurred fraudulently
Some of these non-dischargeable debts can be more successfully dealt with either discharged or paid via terms that are more friendly than outside bankruptcy in a chapter 13 bankruptcy case.