There are some debts that cannot be discharged in a Chapter 7 bankruptcy. These include child support, alimony, certain tax obligations, most student loans, and debt incurred through wrongful conduct or at a time when there was no ability to repay. Another limit of bankruptcy is that if the debtor intends to keep his secured property (i.e. house and car), he must continue to make regular payments. While bankruptcy can prevent an impending foreclosure, it should not be used merely as a stalling tactic if there is no desire and financial ability to keep the property. Also, bankruptcy will not protect the fraudulent transfer of assets, hiding of assets, or one who makes false statements in a bankruptcy petition. Another limit is the number of times one can file bankruptcy; a debtor must wait 8 years between Chapter 7 bankruptcy filings.
In balance, bankruptcy should help an honest debtor start fresh while also protecting the interests of certain other parties. Do not be tempted to pay back family members with income tax refunds, take out cash advances from one card to pay another, sell or transfer property to anyone for less than full value, or fail to disclose all property you may have owned in recent years. You also need to be careful not to use your credit cards up to the last second. Creditors could argue that you “knew, or should have known” that you used the cards when there was no ability or intention to repay the debt. If your monthly net pay is not enough to handle your present monthly living expenses, do not continue to use your credit cards to make up the difference. These are just a few of the common mistakes that could prevent you from getting the protection you need.