Can a Chapter 7 bankruptcy eliminate all debt?
Chapter 7 bankruptcy will not discharge or eliminate all debts. There’s certain preferential debts or priority debts, like a debt to the Internal Revenue Service; certain child support or spousal support obligations, depending on the state law that has enabled those to be levied. There’s also the issue of debts that are secured on items that you want to keep. For instance, if I went through Chapter 7 bankruptcy, and I was current on my house payment and car payment, I might want to consider continuing to make those payments and continue to make those payments through the bankruptcy and until I’d paid off those items.