Chapter 7 bankruptcy is a legal process designed to help individuals and businesses eliminate their debts and get a fresh financial start. However, there are certain restrictions and limitations on what you can and cannot do after filing for Chapter 7 bankruptcy.

Avoid Spending Outside Your Income Levels

Living within your means is crucial, especially for those who have filed for bankruptcy due to insufficient income. Any changes in income or expenses should be discussed with a bankruptcy attorney before altering spending habits, as court approval may be necessary to comply with bankruptcy laws.

Failing to disclose income or assets on your bankruptcy schedules can result in serious consequences. This includes the dismissal of your bankruptcy case or even criminal charges. Be truthful and accurate when disclosing your financial information during bankruptcy.

You Cannot Neglect Your Alimony & Child Support Obligations After Chapter 7

When you file for bankruptcy, you are required to list all of your debts, including any outstanding alimony or child support payments. These debts will not be discharged, and you will still be required to make payments on them.

Failure to make these payments can result in legal consequences, including wage garnishment, seizure of assets, and even imprisonment. It is important to make these payments on time and in full to avoid any legal consequences.

You Cannot Ignore Student Loans

Student loans cannot be discharged in Chapter 7 bankruptcy unless you can prove “undue hardship” – a serious financial burden that makes repayment almost impossible. This may be a difficult standard to meet, and you will need the help of an experienced bankruptcy attorney to make your case.

Undue hardship can be demonstrated by showing poverty, persistence, and good faith. You must show that you are unable to maintain a decent standard of living while also paying back the loan, that your financial situation is unlikely to change in the near future, and that you have made a good faith effort in repaying the loan.

You Cannot Eliminate Most Tax Debt

Whether you reside in Austin, TX, or any other place or state in the U.S., you are bound to face challenges trying to get rid of tax debt through Chapter 7 bankruptcy. Eliminating tax debt through Chapter 7 bankruptcy is difficult and subject to strict conditions, such as the tax debt being at least three years old and not related to fraud penalties or payroll taxes. 

Additionally, you must prove that you did not commit willful tax evasion or fraud. The IRS also has a 240-day rule that must be considered. It is significant to seek the help of a qualified bankruptcy attorney to better understand which tax debts can be discharged and how you can do it.

You Cannot Eliminate Non-Dischargeable Debts

Certain debts are considered non-dischargeable in Chapter 7 bankruptcy, such as debts related to personal injury caused by drunk driving, traffic-related penalties, criminal restitution, and debts not listed in bankruptcy papers unless the creditor is aware of the case. These debts cannot be eliminated through bankruptcy.

You Can’t Eliminate Debt Linked To Fraud

If you obtain a loan by lying on a credit application and committing fraud, the resulting debt cannot be discharged through Chapter 7 bankruptcy. If a lawsuit is filed against you in what is known as adversary proceedings and a judge rules that the debt is related to fraud, it will not be eliminated through bankruptcy. Therefore, you must repay any debt resulting from fraudulent activities.

Why Hire An Attorney From Lincoln-Goldfinch Law?

If you are considering filing for bankruptcy, it is highly recommended to seek the assistance of a bankruptcy lawyer such as Lincoln-Goldfinch Law. Filing for bankruptcy can be a complicated process, and having a lawyer who is experienced in bankruptcy can help make the process smoother and less stressful.

A bankruptcy lawyer can provide you with the necessary legal advice and guidance throughout the process, helping you understand the different types of bankruptcy available and determining which option is suitable for your specific situation. They can also assist with filling out the necessary paperwork, ensuring that all information is provided and filed correctly. And yes, a lawyer will tell you what can you not do after filing Chapter 7.

Summary

The article discusses the restrictions and limitations of Chapter 7 bankruptcy, which is designed to help individuals and businesses eliminate their debts and start afresh. The restrictions include not spending beyond one’s income levels, paying alimony and child support payments, and being unable to eliminate most tax debts, non-dischargeable debts, and debts linked to fraud. 

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