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A Chapter 7 bankruptcy, also ominously known as “absolute” or liquidation” bankruptcy, will discharge a significant number of debt, but that relief does not come without a price. In 2005, Congress passed the Bankruptcy Abuse and Consumer Protection Act of 2005 which made declaring bankruptcy harder and placed a greater obligation on the debtor to repay some or all of their debt. These reforms require debtors to attend credit counseling and budget management coaching in addition to having to prove by way of a “means test” that they can repay some or all of their debt in a Chapter 13 plan. For those who cannot pass this test, Chapter 7 remains their only option for a Virginia bankruptcy.
Unfortunately, some debts will not be discharged even after a Chapter 7 bankruptcy is done. They include:
· Child support and alimony due (including past due amounts)
· Student loans (unless the court has determined that repayment of the debt will cause “undue hardship” to the debtor and his or her dependents.
· Debts created from being found guilty of driving while intoxicated or damages incurred due to an accident cause by drunk driving.
· Debts not listed in the bankruptcy petition.
· Debts owed creditors not listed in the bankruptcy petition.
· Court fees owed.
· Federal, state and local taxes.
· Restitution, fines and penalties evaluated by the government.
· Debts not dischargeable from a previous bankruptcy due to debtor fraud.
Creditors are given the chance to contest the discharge of certain debts included in the Chapter filing and the court may allow their objections if the creditors can prove the
debts in question fall into one of the following general categories for a chapter 7 in Virginia:
· The debt created by willful and malicious actions(such as assaulting someone)
· The debt was created by fraud. These categories include balances on credit cards charged up within 90 days of the court filing for luxury goods and services.
· Cash advances of more than $750 drawn from accounts within 70 days of filing the bankruptcy petition.
· Debts from a divorce settlement or other court decree which the debtor is able to pay and nonpayment hurts the recipient more than it benefits the debtor.
· Debts created from embezzlement, theft or a violation of some trust, or fiduciary duty.
Contact a local bankruptcy attorney for further details about a Virginia bankruptcy.
