Bank finance articles and tips

There are many misconceptions about bankruptcy, one which relates to which debts are dischargeable and which are not. In general, there are some easy rules to help you remember, but there are also a few exceptions to the rule....

Filing for a Chapter 7 bankruptcy can provide the immediate financial relief you'll need. Chapter 7 bankruptcies are relatively quicker than their more complicated Chapter 11 and Chapter 13 counterparts - and as you don't have to undergo any repayment plans, you'll immediately experience relief from your biggest debts.

However, that doesn't mean that you'll experience relief from ALL of your debts; in fact, there are exemptions to this rule that can ultimately determine whether or not you'll file for Chapter 7 bankruptcy. If one of your biggest debts can't be discharged by a Chapter 7, you and your bankruptcy attorney view other alternatives.

With this in mind, let's take a look at the debts that can't be discharged in a Chapter 7 bankruptcy.

Levels of homelessness are on the rise, as are requests and applications for IVA (Individual Voluntary Arrangement) help. More and more people are turning to IVA help as a way to deal with their financial problems and those that can't get IVA help risk winding up on the streets. Both the increase in applications for IVA help and this year's 8% rise in homelessness are symptoms of the country-wide economic downturn.

Other than the increase in applications, the biggest change when it comes to IVA help is the people who are applying for it. IVA help was once the fall-back option for low-income families who had fallen on tough times, now increasing numbers of lower-middle and middle class earners are finding themselves with insurmountable debts and looking into getting IVA help.

The answer is no, yes, and yes. During recent budget sessions in the California assembly a representative suggested that the State of California should file bankruptcy. It is not possible under the United States Constitution for a state to file for bankruptcy and discharge debts. County governments and municipal governments are able to file for bankruptcy and reorganize their debts in Chapter 9 of the bankruptcy code.

Bankruptcy protection provides consumers with a way to start over again financially through a complete or partial discharge of debts or a reorganization of debts. For many consumers the most critical consideration is finding out exactly what types of debts can be discharged in a Chapter 7 or Chapter 13 bankruptcy. Individual financial circumstances and state-specific bankruptcy regulations will determine exactly what debts can be discharged and by whom in a bankruptcy, but for the most part these debts include: taxes, mortgages and equity lines of credit, loans, medical bills, and credit cards. A discharge of debts under bankruptcy protection must meet the following guidelines in order to be approved by the bankruptcy trustee and court: