The possibility of gaining a fresh financial start can make Chapter 7 bankruptcy attractive to Iowa residents looking for a way to climb out from underneath large financial debt. A person filing for Chapter 7 can successfully liquidate a number of debts, including credit card bills, medical bills and personal loans. However, according to the U.S. Courts website, there are some debts that, for various reasons, will not be discharged under Chapter 7.

A discharge in Chapter 7 bankruptcy releases a debtor from being personally liable for a debt. When a discharge is granted, a creditor that is owed the debt is not allowed to take action against the debtor to collect outstanding debts. These coercive or predatory actions can include asset collection action or any legal action against the debtor. Generally, barring an objection lodged by a party of interest against the discharge, bankruptcy judges will issue discharges at an early time in the case, usually within the 60 to 90 day time period after the first meeting of the creditors involved.

However, this does not mean all of a person’s debts can be discharged with Chapter 7 bankruptcy. A bankruptcy court will at times deny a discharge if a debtor does not meet certain requirements. In some cases, a debtor may fail to produce or keep proper books and financial records. Debtors may also not adequately explain a loss of assets. Crimes or failure to obey legal procedures can also weigh against a discharge. For example, courts may reject discharges if they find the debtor committed perjury during the course of the bankruptcy proceeding or unlawfully caused damage or destruction to property that would have been claimed by the estate.

There are also debts that do not qualify for discharge for Chapter 7. These can include, but are not limited to:

  • Government educational benefit loans
  • Alimony or child support
  • Specific taxes
  • Some criminal restitution orders

In addition, a debtor cannot expect to be released from debts stemming from harm committed to another party behind the wheel of an automobile due to personal intoxication, or if the debtor had destroyed the property of another party willfully and maliciously or committed personal injury against another person.

This article is intended to educate readers on Chapter 7 bankruptcy and is not to be taken as legal advice.