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Which debts are non-dischargeable in Chapter 7 bankruptcy?

Washington consumers who are experiencing financial instability because they have no stable employment may benefit from the protection of personal bankruptcy. Chapter 7 bankruptcy may also be referred to as a liquidation bankruptcy, and while it will discharge most unsecured debts, non-exempt assets will be liquidated, and the proceeds distributed to creditors. However, some debts will not be discharged, and creditors may claim that a particular debt is non-dischargeable.

The debt categories that will not be discharged include most taxes, spousal support and child support. If a creditor claims that a particular debt should not be discharged, a complaint will have to be filed with the Bankruptcy Court. Reasons for a debt to be found non-dischargeable include debts obtained fraudulently, such as providing false financial information, or any other false pretences or representations. For example, if a person uses loan funds intended for home improvements to finance a vacation, or obtains a bank loan by providing inaccurate income and asset information, those debts may not be dischargeable.

Service of the complaint will occur by mail, and subsequent procedures may vary. Usually, the individual will have to appear in the Bankruptcy Court to obtain details about the trial. The burden of proof to show reasons for denying the discharge will be on the person responsible for filing the complaint. Upon completion of the trial, the judge will rule whether the debt will be discharged or whether the consumer will remain liable to pay the particular debt.

Washington consumers considering a Chapter 7 bankruptcy will surely benefit by consulting with an experienced Chapter 7 bankruptcy attorney. If a debt is ruled to be non-dischargeable by the Bankruptcy Court, the consumer is entitled to appeal. An attorney can provide valuable guidance and support in understanding the legalities of bankruptcy proceedings and what steps may be helpful in achieving the results desired.

Source: bankruptcy.about.com, "Exceptions to Bankruptcy Discharge Lawsuit", David Haynes, Jan. 14, 2015

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