There are a few very significant exceptions to the rule that all debts will be discharged. Using the provisions of 11 U.S.C. 523, for instance, a creditor may contest a debt discharge. It is possible to accuse a debtor of false pretenses or actual deception. If the court does not discharge any debt, the creditor must be repaid, which will have a significant impact on a person's bankruptcy filing objectives.
The purpose of exemptions is to ensure that financial obligation discharge is granted only to those who are deserving of relief and are not filing for bankruptcy with the intention of being dishonest. The Bankruptcy Code has some debt discharge exclusions. A financial obligation cannot be discharged if it was obtained through any form of dishonesty or if it was created in accordance with public policy.
Debts incurred as a result of illicit activity are not dischargeable. Non-dischargeable debts due to public policy include student loans, child support, alimony, customs duties and taxes, government fines, penalties, and forfeitures, unscheduled claims, and certain debts that survived a prior bankruptcy filing. These two exceptions do not qualify a debt for discharge, so the debt remains.
Since 523 also contains a provision stating that any debt incurred from the purchase of opulent services or goods within 90 days prior to filing Chapter 7 is not dischargeable, there is the potential for complications with debts like credit card debt. In addition, a number of courts have determined that certain credit card debts are not dischargeable, as charging something to a credit card implies that the cardholder can and will pay for the charged amount.
Aside from creditors pursuant to 523, the pursuant of U.S.C. 727 by a creditor or the trustee can result in a court's dismissal of a final discharge in bankruptcy, regardless of its nature, if the person seeking bankruptcy fails to sufficiently clarify how any asset was lost, disobeys court orders, withholds estate records, acts or refrains to act with the intent to obtain an advantage, intentionally makes a false claim, oath, or account in A bankruptcy court judge may also dismiss a case for any unlisted debt, unpaid fees or payments, or for causing proceedings to be delayed for no acceptable reason.
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