Lapeer Michigan Bankruptcy Limits – Debts That Can’t Be Discharged

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Lapeer Michigan Bankruptcy Limits – Debts Bankruptcy Does Not Discharge

As I mentioned before, some debts cannot be discharged in a bankruptcy.

Certain types of debts, such as:

  • Child Support
  • Alimony
  • Most Student Loans
  • Some Federal Income Taxes, and
  • All Employer Withholding Taxes

Cannot be discharged in bankruptcy.

The debtor’s wrongful conduct may make some debts non-dischargeable.

Examples of such conduct are incur credit card charges without the intent, or the ability to repay or obtaining loans using false financial information.

Banruptcy does not wipe out most mortgage or liens.

A debtor who wants to keep his or her house, must continue making mortgage payments.

A debtor who wants to keep a car, which is being financed, must likewise continue making the payments.

A debtor who is behind on mortgage payments, may use Chapter 13 to keep his or her home, by catching up on past-due payments over time, plus making regular mortgage payments.

Lapeer Michigan Bankruptcy Limits

In a Chapter 7 case, certain property can be redeemed from a lien or, in other words, purchased for what it is worth.

For example, in a bankruptcy proceeding, the court may determine that a car on which the debtor owes $3,000 is only worth $1,500.

The debtor may then keep the car by paying the lump sum of $1500.

In either chapter, some liens on exempt personal property can be avoided altogether, allowing for the debtor to keep the property without making payments.

Under certain circumstances, a debtor may be denied a discharge altogether, and continue to owe all debts as if the bankruptcy had never been filed.

Lapeer Michigan Bankruptcy Limits – Some of the reasons for being denied a discharge:

  • Fraudulent transfer of assets
  • Concealment of assets
  • Making false statements
  • Disobeying the court

Such acts may also be federal crimes, for which the debtor can be fined or imprisoned. We’ll tell you more about that in a later segment of this video.

Limits On Frequency of Discharges

The bankruptcy code limits the frequency with which an individual may receive a discharge.

These limits depend on the chapters under which the debtors file.

As mentioned earlier, the law permits debtors in bankruptcy to keep or exempt certain property in order to make a fresh start.

However, to keep liened property, such as, a home or a car, the debtor must still pay the secured debt.

In Chapter 7, the exemption process means that a trustee cannot sell exempt property for the benefit of creditors.

Generally, the trustee can only sell non-exempt property.

Sometimes an item of property is only partially exempt, and the trustee can sell it and pay the debtor the amount of the exemption.

For example, if the debtor owns a car worth $3,000, and lives in a state where there’s a car exemption of $1,000, the trustee may sell the car and give the debtor the exempt amount, and then use the remaining amount to pay creditors.

In such situations, the debtor may keep the car by paying the trustee $2,000, the value of the car that is not exempt.

The Bankruptcy Code provides certain federal exemptions and also allows each state to adopt its own exemption law in place of the federal exemptions.

The availability and the amount of property you may exempt therefore, depends on the state where you live.

Some common examples of exempt property are:

  • A portion of the equity in a debtor’s home
  • A portion of the equity in one motor vehicle
  • Some or all “tools of the trade” used by the debtor to make a living. Such as, auto tools for an auto mechanic or dental tools for dentists.

You’ll lose any exemption that you don’t claim. It’s therefore, very important for you to consult an attorney to determine which exemptions are available.

It’s also very important to carefully list, describe and value all property you claim as exempt in the schedules filed with your bankruptcy petition.

Watch The Next Video In Our Lapeer Michigan Bankruptcy Series:

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