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Will all my debts be wiped out in a bankruptcy?

There's a common misconception that a Chapter 7 bankruptcy will totally wipe a debtor's slate clean. While that would make many filers very happy, unfortunately, some debts are not discharged via bankruptcy.

Certainly Chapter 7 is the best option for many consumers, as it sheds more debt than a Chapter 13, which is more of a reorganization. But debtors should realize that filing for Chapter 7 will not erase all debts, including those listed below:

-- Restitution ordered by a court

-- Condo and HOA fees

-- Financial obligations for spousal or child support

-- Any fees or fines like speeding or parking tickets that are outstanding to government entities

-- Attorney's fees owed from custody or child support cases

-- Specific tax debts

-- Settlement monies owed by defendants in a drunk driving litigation

-- Debts owed to former spouses as stated in divorce decrees and separation agreements

-- Debts left out of the bankruptcy petition

-- Debts owed to 401(k) loans and other retirement plans

If you were hoping to permanently extinguish these debts in a Chapter 7 bankruptcy discharge, you may be disappointed. But all is not lost. Speak to an experienced bankruptcy attorney to learn if it might be possible to satisfy your creditors with inclusion in your restructured repayment plan.

Credit counseling that is mandatory with certain bankruptcy filings can help you learn the pitfalls of debt and how to avoid getting trapped again by the same old bad spending habits that got you into financial hot water this first time. When handled proficiently by experienced legal professionals, Chapter 7 bankruptcies can provide debtors with the relief they need to financially prosper once again.

Source: Credit Solution Program, "Will Bankruptcy Wipe Out All of My Debt?," Rebecca Lake, accessed Oct. 21, 2016

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At the law offices of William H. Oliver, Jr. & Associates in Toms River and Lakewood, New Jersey, we represent clients in Toms River, Neptune, Trenton, Middletown, Red Bank, Wall, Lakewood, Lakehurst, Manchester, Asbury Park, Old Bridge, Jamesburg, Barnegat, Forked River, Manahawkin, Ocean Township, Brick, Manasquan, Howell, Freehold, Hazlet, Bradley Beach, Brown Mills, Long Branch, Keansburg, Marlboro, Bayville, Beachwood, Whiting, Sayreville, South River, East Brunswick, Monmouth County, Ocean County, Middlesex County, Burlington County and Mercer County.