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West Palm Beach Bankruptcy & Business Attorneys > > Chapter 7 Bankruptcy > Does Chapter 7 Bankruptcy Erase All Debts?

Does Chapter 7 Bankruptcy Erase All Debts?


If you are considering the possibility of filing for Chapter 7 bankruptcy, you are likely seeking information about whether all of your debts will be erased at the end of your bankruptcy case. Many people assume that liquidation bankruptcies always give debtors a total fresh start—and this is true for many debtors—yet it is important to know that all of your debts may not be erased in a Chapter 7 bankruptcy case. To be sure, there are certain types of debts that cannot be erased, or “discharged,” when a consumer files for personal bankruptcy. Our bankruptcy lawyers in West Palm Beach can say more.

Identifying Dischargeable Debts

 Before you file for Chapter 7 bankruptcy, you should speak with a bankruptcy attorney in West Palm Beach to make sure that all of your debts, or at least a significant portion of your debts, will be dischargeable in your bankruptcy case.

Most kinds of consumer debts are dischargeable, including credit card debt and medical debt. Yet some types of debt can be very difficult to discharge, such as student loan debt, and other types of debt may not be dischargeable at all.

Understand Types of Debt That Are Non-Dischargeable

 What types of debts cannot be discharged? Some types of tax debt are non-dischargeable, which means that those debts will not be erased in your Chapter 7 case. In addition, any family support debt you owe, such as child support, is non-dischargeable and cannot be erased if you file for Chapter 7 bankruptcy. Money you owe as a result of restitution payments, as well as certain damages you have been required to pay by a court, will also not be erased in a Chapter 7 bankruptcy filing.

Distinctions for Businesses Filing for Chapter 7 Bankruptcy 

As you may know, a business that files for Chapter 7 bankruptcy will need to close its doors, but the business will not receive a “discharge” as an individual debtor will in a liquidation bankruptcy. Since a business is not operational after it closes, the creditor will not be able to collect debts from the business. Accordingly, debts are not discharged in business liquidation bankruptcies. However, in some circumstances, the creditor may be able to seek payment from an individual business owner as a result of a personal guarantee, for example.

For types of debt that are traditionally non-dischargeable in a Chapter 7 consumer bankruptcy case, businesses may be able to seek a cancellation if the owners are concerned that they will be personally liable. For example, a business might be able to ask the IRS to cancel business tax debt, but this process is complex, and it may not be necessary.

Contact Our West Palm Beach Bankruptcy Lawyers Today

 Do you have questions about filing for bankruptcy and having your debts erased in a Chapter 7 bankruptcy case? You should contact one of the experienced West Palm Beach Chapter 7 bankruptcy attorneys at Kelley Kaplan & Eller for more information. Our firm routinely assists individuals and businesses with Chapter 7 bankruptcy cases, and we can speak with you today about your circumstances and your ability to receive a debt discharge or cancellation.



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