5 debts that are not discharged in Chapter 7

Filing bankruptcy is an option that many people in New Mexico choose to help them manage their debts and gain a fresh financial start. This fresh start is often made possible with the discharge, where the court eliminates your debts.

However, a Chapter 7 bankruptcy does not discharge all debts. Some debts – as well as the responsibility to repay them – will remain after you complete your case.

What debts stay after Chapter 7?

Here are the five most common debts that often remain after completing a Chapter 7 bankruptcy case:

1. Student loans: Taking out federal student loans requires making an agreement with the government that you will pay them back. A bankruptcy discharge does not change that agreement. There are some cases nowadays where individuals obtained a discharge for their student loans, mainly if they created an undue hardship. Even so, these loans remain one of the most common non-dischargeable debts.
2. Support payments: These include child support payments or spousal support payments. These debts remain because support payments are court-ordered obligations you must fulfill.
3. Court-ordered payments: Other court-ordered obligations are not dischargeable as well. For example, if you owe civil fines, such as payments for a speeding or parking ticket, you must still pay those fines.
4. Tax debts: It is important to note that certain tax debts can be discharged in bankruptcy, while some cannot. The discharge of these debts depends entirely on the factors of your case.
5. Secured debts: Although you can discharge the debt, if you keep property that serves as collateral for secured debts – such as a vehicle or home – then you often must continue to make payments on this debt. Certain property is exempt in bankruptcy, protecting it from liquidation and allowing you to keep it. However, this often involves reaffirming the debt as well as your obligation to repay it. It is usually possible to renegotiate the obligation or monthly payments.

Chapter 7 bankruptcy still discharges several kinds of debts, from medical debt to credit card debts. This makes it easier to retake control of your finances and your life.

Even so, it is critical to be aware of the debts that are not dischargeable before beginning the bankruptcy journey, so you can prepare yourself for the future.