Types of Debt Not Covered in Chapter 7 Bankruptcy

A frequent attendee of the Debt Connection Symposium, Jonathan Koop is founder and CEO of Bankrupt Debt Acquisitions. With his extensive knowledge of bankruptcy, Jonathan Koop’s company has a successful record of accurately predicting the liquidation of bankruptcy debt.

Bankruptcy is a legal proceeding where individuals or businesses unable to settle current debts petition a court to dismiss the debt. In Chapter 7 bankruptcy, a debtor is permitted to hold on to key assets referred to as "exempt" properties, while other properties considered "non-exempt" are sold to pay part of his or her debt. However, some debts are not covered in Chapter 7 bankruptcies, which means the individual will still be responsible for them.

Liens on properties, such as a home mortgage, are not covered in bankruptcy. Chapter 7 bankruptcy doesn't include debts that were not in the name of the person filing the bankruptcy, so it is important for someone who intends to file for bankruptcy to be sure all debts included are in his or her name. Debts from reckless and willful acts, such as embezzlement, and fraud are also not covered. Often, recent credit card debts are not discharged in Chapter 7 bankruptcy. Unless there is proof a person is unable to repay their school loan debt, and they have been making an effort to do so, a court will not discharge such debt in Chapter 7 bankruptcy.