Anyone in Texas considering filing for bankruptcy should take some time to understand the fine details of the process. Bankruptcy can be a way out of financial problems and out-of-control debt, a way to wipe the slate clean. But in order to successfully complete the bankruptcy process, you need to have a clear understanding of your options and how it all works.
Chapter 7 bankruptcy represents the strongest form of debt relief available to a person. After successfully filing for Chapter 7 bankruptcy, the bankruptcy court will issue a discharge, freeing you from the obligation to pay back certain debts. However, there are some exceptions and wrinkles to the process.
The basics of a Chapter 7 discharge
Assuming the bankruptcy court doesn’t reject or convert a Chapter 7 filing, the court will then issue a discharge, meaning that creditors will no longer be able to pursue any recourse against the person filing for bankruptcy.
Nearly all successful Chapter 7 bankruptcy cases resolve with a discharge. The two main reasons why a person filing for Chapter 7 might fail to receive it are either another party files a complaint against the discharge, or the type of debts are excluded from Chapter 7 relief.
Grounds for objecting to a discharge
In a Chapter 7 bankruptcy, parties of interest typically have from 60 to 90 days to object after having a meeting with creditors. In order for the court to recognize a complaint, it will need to find some instance of violation by the filer.
Some common violations are the debtor having concealed or destroyed property that would have been forfeited as a result of the bankruptcy, the debtor having ignored instructions from the bankruptcy court, the debtor being unable to explain where their assets went and the debtor having not kept adequate documentation of their finances.
Debts excluded from Chapter 7 relief
If the court issues a discharge, certain types of debts are not covered:
- Recent back taxes
- Child support and alimony
- Some personal injury judgments
While the above exceptions do somewhat limit a Chapter 7 discharge, it remains a powerful tool for freeing yourself from many insurmountable financial obligations.