The downside of filing for Chapter 7 bankruptcy is that not all debts can be discharged. While Chapter 7 can provide significant relief from overwhelming debt, there are certain types of debts that will remain on your account even after filing.
One major category of debts that cannot be discharged in Chapter 7 bankruptcy is domestic support obligations, such as alimony and child support. These obligations are considered a priority and are given special treatment in bankruptcy proceedings. Filing for Chapter 7 will not eliminate your responsibility to make these payments.
Another type of debt that cannot be discharged in Chapter 7 is tax liens. If you owe back taxes to the government and a lien has been placed on your property, filing for Chapter 7 will not remove the lien. The government will still have a claim on your assets to satisfy the tax debt.
Student loans are another type of debt that generally cannot be discharged in Chapter 7 bankruptcy. While there are rare exceptions for cases of severe financial hardship, most student loans will survive the bankruptcy process. This can be a significant drawback for individuals burdened by student loan debt seeking relief through Chapter 7.
Personal injury debts caused by intoxicated drivers also cannot be discharged in Chapter 7 bankruptcy. If you have been injured by a drunk driver and have obtained a judgment against them, that debt will not be eliminated by filing for Chapter 7. This is to ensure that those responsible for causing harm while under the influence of alcohol or drugs are still held accountable for their actions.
It's important to note that while these debts may not be dischargeable in Chapter 7, bankruptcy can still provide some relief by eliminating other types of debts. By wiping out unsecured debts like credit card balances, medical bills, and personal loans, Chapter 7 can free up resources to help you meet your ongoing financial obligations.
In my personal experience working with individuals who have filed for Chapter 7 bankruptcy, it can be disheartening to realize that not all debts can be discharged. However, it's crucial to remember that bankruptcy is a legal tool designed to provide a fresh start for those overwhelmed by debt. While it may not solve all financial problems, it can still offer significant relief and a chance to rebuild your financial life.