Tennesseans buried in a deep debt hole likely have heard of Chapter 7 bankruptcy, an option that can seemingly make debt disappear as if it never happened. But what is Chapter 7 and just how thoroughly does it erase a debtor’s ledgers? To learn more, read on.

Chapter 7 is a form of bankruptcy in which a person sells off much of their assets, but there are exceptions. The proceeds are then used to pay creditors. Whatever debt remains after the proceeds have been distributed is generally discharged. But not all debts are subject to this process; some cannot be discharged through bankruptcy.

There are dozens of debts that fall in this camp. One form that has received considerable ink in the press as of late is student loans. Student loans are seldom dischargeable. Other non-dischargeable debts include alimony, child support, court fees, tax obligations and debts not listed by someone when they filed for bankruptcy.

On top of these, bankruptcy will normally not discharge debts incurred in good faith. For example, a creditor can object to discharging debts that were procured through fraud, through malicious acts or through larceny, embezzlement or breaching a fiduciary duty.

As these examples highlight, while Chapter 7 is a welcome option for Tennesseans in need of help during a difficult time, Chapter 7 does not excuse all debts. Nor does it help those who wield it as a weapon to further a criminal scheme.

Those interested in knowing more about Chapter 7 and its benefits and limitations may benefit from discussing their situation with an experienced bankruptcy attorney.

Source: FindLaw, “Debts that Remain After a Chapter 7 Discharge,” Accessed Sept. 8, 2015