In recent years, many Tennessee residents have amassed different types of debt. As people struggle to recover from the so-called Great Recession, many may be considering their debt relief options. In some cases, filing for bankruptcy under chapter 7 may be the best recourse. Under chapter 7 bankruptcy, assets are placed into an estate and liquidated and the money received for the assets is used to pay creditors. Any remaining debt is discharged.

A chapter 13 bankruptcy may also be considered by Tennessee residents. In that case, a repayment plan is created for debtors. After paying on the plan for three to five years, the remaining debt is discharged.

However, in either case there are certain debts that cannot be discharged as a result of the bankruptcy. In a chapter 7 filing, there are 19 categories of debt that will not be discharged. These types of debt include child support or alimony obligations, certain tax claims, government funded student loans, loans against retirement plans and condominium housing fees. Additionally, debts that are related to personal injury lawsuits and drunk driving lawsuits are also non-dischargeable. Finally, debts that are not listed in the bankruptcy petition or its schedules won’t be discharged.

In a chapter 13 bankruptcy, fewer debts are non-dischargeable. Divorce related property settlements and personal injury claims, for example, may be discharged in a chapter 13 bankruptcy.

People who are considering filing for bankruptcy should make sure they understand whether their debt will be discharged at the end of the process. Without the discharge, people could still face financial challenges. Therefore, it is important for people to consult knowledgeable legal help when considering their debt relief options.

Source: Findlaw.com, “The Debt Discharge in Bankruptcy FAQ,” accessed Aug. 31, 2014