Chapter 7 is for individuals who have financial difficulty preventing them from paying their debts and who are willing to allow their nonexempt property to be used to pay their creditors. The primary purpose of filing under Chapter 7 is to have your debts discharged. The bankruptcy discharge relieves you after bankruptcy from having to pay many of your pre-bankruptcy debts. Exceptions exist for particular debts, and liens on property may still be enforced after discharge. For example, a creditor may have the right to foreclose a home mortgage or repossess an automobile.
However, if the court finds that you have committed certain kinds of improper conduct described in the Bankruptcy Code, the court may deny your discharge or worse, prosecute you for bankruptcy fraud.
You should know that even if you file Chapter 7 and you receive a discharge, some debts are not discharged under the law. Therefore, you may still be responsible to pay:
- Most taxes;
- Most student loans;
- Domestic support and property settlement obligations
- Most fines, penalties, forfeitures, and criminal restitution; and
- Certain debts that are not listed in your bankruptcy papers.
You may also be required to pay debts arising from:
- Fraud or theft;
- Fraud or defalcation while acting in breach of fiduciary capacity;
- Intentional injuries that you inflicted; and Death or personal injury caused by operating a motor vehicle, vessel or aircraft while intoxicated from alcohol or drugs