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Basics of a Chapter 7 discharge

When a New Jersey resident receives a discharge in bankruptcy, he or she is no longer liable for the debts affected. Further, the creditors to which those particular debts were owed may not attempt to collect them from the individual. However, certain financial obligations cannot be discharged in a Chapter 7 bankruptcy, and under certain circumstances, a discharge can be denied.

Fortunately, 99 percent of the time, a filer will be granted a discharge in a Chapter 7. Unfortunately, a discharge can be denied if the court determines that financial records are inadequate or a satisfactory explanation is not given for lost assets. In addition, an order denying a discharge can be entered if the filer commits perjury or fails to obey a lawful order of the court. Hiding, destroying or transferring assets could also result in the denial of a discharge. For many ordinary filers, however, a discharge is most often denied because the required financial management course was not completed.

Even if everything is done correctly, certain debts may remain unaffected by the bankruptcy and the discharge. The most common financial obligations New Jersey residents may have that remain intact despite filing for bankruptcy are child support and alimony, certain taxes and student loans. Other less common obligations for which a filer would remain liable are judgments in motor vehicle accidents during which the driver was under the influence of drugs or alcohol.

When an individual is contemplating filing for bankruptcy, it is important to first understand what debts may be subject to discharge in a Chapter 7 or a Chapter 13 bankruptcy, the two more common types of bankruptcy filed by individuals. It is also beneficial to know what actions should be avoided both before filing and during the process in order to avoid any appearance of impropriety or run afoul of specific laws or regulations. Having the advice and assistance of an attorney familiar with the rules, documents and laws regarding bankruptcy could help to avoid any unexpected surprises.

Source: FindLaw, "Chapter 7: Debt Discharge", Accessed on May 12, 2015

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