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Common exceptions to discharge include child support, income
taxes less than 3 years old and property taxes, student loans (unless the
debtor prevails in a difficult-to-win adversary proceeding brought to determine
the dischargeability of the student loan), and fines and restitution imposed by
a court for any crimes committed by the debtor. Spousal support is likewise not
covered by a bankruptcy chapter 7 filing nor are property settlements through
divorce. Despite their potential non-dischargeability, all debts must be listed
on bankruptcy schedules. A chapter 7 bankruptcy stays on an individual's credit
report for 10 years from the date of filing the chapter 7 petitions. This
contrasts with a chapter 13 bankruptcy, which stays on an individual's credit
report for 7 years from the date of filing the chapter 13 petition. This may
make credit less available and/or terms less favorable, although high debt can
have the same effect. That must be balanced against the removal of actual debt
from the filer's record by the bankruptcy, which tends to improve
creditworthiness. Consumer credit and creditworthiness is a complex subject,
however. Future ability to obtain credit is dependent on multiple factors and
difficult to predict. Another aspect to consider is whether the debtor can avoid a
challenge by the United States Trustee to his or her Chapter 7 bankruptcy filing
as abusive. One factor in considering whether the U.S. Trustee can prevail in a
challenge to the debtor's Chapter 7 bankruptcy filing is whether the debtor can
otherwise afford to repay some or all of his debts out of disposable income in
the five year time frame provided by Chapter 13. If so, then the U.S. Trustee
may succeed in preventing the debtor from receiving a discharge under Chapter 7
bankruptcy, effectively forcing the debtor into Chapter 13 bankruptcy. It is widely held amongst bankruptcy practitioners that the
U.S. Trustee has become much more aggressive in recent times in pursuing (what
the U.S. Trustee believes to be) abusive Chapter 7 filings.[citation needed]
Through these activities the U.S. Trustee has achieved a regulatory system that
Congress and most creditor-friendly commenter�s have consistently espoused,
i.e., a formal means test for Chapter 7. The Bankruptcy Abuse Prevention and
Consumer Protection Act of 2005 has clarified this area of concern by making
changes to the U.S. Bankruptcy Code that include, along with many other
reforms, language imposing a means test for Chapter 7 cases. Creditworthiness and the likelihood of receiving a Chapter 7
discharge are only a few of many issues to be considered in determining whether
to file bankruptcy. The importance of the effects of bankruptcy on creditworthiness
is sometimes overemphasized because by the time most debtors are ready to file
for bankruptcy their credit score is already ruined. Also, new credit extended
post-petition is not covered by the discharge, so creditors may offer new credit
to the newly-bankrupt.
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