What debts can be cleared in a Chapter 7?

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What debts can be cleared in a Chapter 7?

I lost everything due to the economic crash. I moved from IL to TX 16 months ago. My outstanding debt in was $500,000 before I moved. I make $50,000 a year and pay $1200 a month in child support. Can I file and be cleared?

Asked on January 20, 2011 under Bankruptcy Law, Texas

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

Bankruptcy can be used to discharge, or extinguish, most forms of debt. There are some exceptions, however, and child support is one of them--you can't use bankruptcy to discharge child support obligations (it's *possible* you could have family court modify them with a sufficient showing of hardship, however). Nor can you use bankruptcy to eliminate alimony debts; student loan debts (except in VERY severe circumstances); tax debts to the government; or  amounts owed for judgments against you in lawsuits for DUI/DWI. Certain forms of criminal restitution also cannot be discharged.

If any debts are secured (e.g. a mortgage, a car loan), the lender can still repossess or foreclose, though at least you wouldn't owe any balance remaining after the repossession or foreclosure.

Unsecured debts, including credit card debts, unsecured loans, and medical bills, can be discharged.


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