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Questions concerning the treatment of debts

Does a bankruptcy relieve me of all of my debts?

The policy of bankruptcy law is that the honest debtor who is in debt beyond its ability to repay its debts should receive a fresh start. However, some debts must still be paid.

Generally speaking, the following debts will not be discharged: taxes; spousal and child support; debts arising out of willful misconduct and/or malicious misconduct by the debtor; liability for injury or death from driving while intoxicated; nondischargeable debts from a prior bankruptcy; student loans; criminal fines and penalties and forfeitures.

Secured debts generally must be paid if the debtor intends to retain the collateral securing the debt. If they are not paid, the creditor will usually take the necessary legal steps to recover the property.

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Will bankruptcy stop a wage garnishment?

Yes.

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Will bankruptcy stop foreclosure?

Temporarily, yes. However, the lender is entitled to seek relief from the automatic stay to allow it to continue foreclosure proceedings.

Usually, to keep a home that is in foreclosure, the debtor will have to reach an agreement with the lender and resume making payments.

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Will bankruptcy stop an eviction?

It may delay it, but the owner is entitled to possession of the property and will be able to resume eviction proceedings with court approval or after the discharge.

Filing a Chapter 7 solely to avoid an eviction might be considered an abuse of the bankruptcy law.

If the Bankruptcy Court finds that this is true, then the court can immediately dismiss the bankruptcy and impose other legal and monetary sanctions on you.

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Will bankruptcy stop a judgement?

Yes. Most collection actions are stopped by bankruptcy.

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Will bankruptcy remove a lien?

Certain liens may be removed, but this requires a motion to be filed with the court. The procedures are complex and are best done with an attorney.

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Will bankruptcy discharge my obligation to pay community debts after a dissolution?

With a few exceptions, you may be discharged from all dischargeable community debts.

In some circumstances, you may still be liable to your spouse if he or she pays the debt, or files a complaint against you in bankruptcy court.

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Is spousal support dischargeable?

Spousal support and child support payments generally are not dischargeable. Certain other dissolution related obligations, such as payments to others, hold harmless provisions and property settlement obligations, are not dischargeable if the debtor has the ability to pay them and the detriment to the spouse outweighs the benefit of the discharge to the debtor.

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Can I discharge student loans?

Generally, student loans are not discharged in bankruptcy. Although there are possible exceptions to this general rule:

  1. The student loan may be discharged if it is neither "insured or guaranteed by a governmental unit" nor "made under any program funded in whole or in part by a governmental unit or nonprofit institution."
  2. The student loan may be discharged if paying the loan will "impose an undue hardship on the debtor and the debtor's dependents."

The facts of the particular case will determine dischargeability. If a student loan falls into one of the three exceptions, discharge of the loan is not automatic. The debtor should file an adversary proceeding in the bankruptcy court to obtain a court order declaring the debt discharged.

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If I co-signed for a debt, does bankruptcy affect the obligation?

If the debt is a dischargeable debt then you will not have to pay it. Your co-signer will become primarily responsible for the debt.

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What if I do not list a creditor on the bankruptcy papers?

You are required to list all creditors. If you intentionally omit a creditor from your schedules, it is perjury and you may lose your bankruptcy discharge. However, if a creditor is not known to exist at the time the schedules are filed, you may amend your schedules at any time the case is open to add an additional creditor.

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