Not all debt can be discharged in a Chapter 7 bankruptcy

Liquidation bankruptcy offers a way for people to climb out of an overwhelming pile of debt and expenses. Otherwise known as Chapter 7, this form of bankruptcy gives people the opportunity to wipe their financial slate clean and gain a fresh start. Despite what some people may think, however, not all debt may be eligible for discharge through a Chapter 7 bankruptcy in Illinois. According to the U.S. Courts, there are certain expenses that may remain on a debtors list of financial obligations, even after the bankruptcy becomes finalized.

People who have incurred student loans or government loans may still be required to make payments on those loans until they are paid off. In addition to these types of loans, debts that cannot be discharged in a Chapter 7 bankruptcy include the following:

  •          DUI penalties
  •          Court-ordered child support and alimony payments
  •          Penalties that debtors are ordered to pay in a personal injury case
  •          Federal and/or state taxes

In some cases, people who file for bankruptcy may choose to continue paying on a debt or loan in order to retain possession of property. The lender may agree to extend the terms of the loan to the debtor even though he or she has filed for bankruptcy. Unlike the other types of debt that cannot be discharged, reaffirmation agreements are completely voluntary.

Creditors who are involved in the bankruptcy are also able to object to the bankruptcy at the meeting of creditors. At this meeting, creditors are able to ask the debtor questions and display their concerns regarding the bankruptcy. 

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