People who file for bankruptcy are financially irresponsible.
FALSE
Individuals and corporations file for Chapter 7, Chapter 11, or Chapter 13 bankruptcy for a large variety of reasons. These reasons are often related to unexpected, and, in many cases, unpreventable, expenses.
For example, individuals may need to file bankruptcy due to unexpected medical bills or a sudden death in the family. Filing for bankruptcy can also often be necessary after a divorce.
Corporations may need to file commercial bankruptcy under Chapter 7 or Chapter 11 because one of their largest customers suddenly went out of business or business slowed down due to sudden changes in their industry such as the financial meltdown in 2008.
Bankruptcy discharges all past debts
FALSE
Not all debts are discharged in bankruptcy. Certain debts receive a priority in bankruptcy proceedings such as: IRS and Franchise Tax Board liens against real property or certain IRS and Franchise Tax Board debt that was incurred within the last 3 years.
Other Debts that cannot be discharged include certain claims for past wages owed to employees, domestic support obligations such as alimony and child support, certain fines or penalties owed to the government, and debts related to fraud or other types of wrongdoing.
This is not a complete list of all debts that cannot be discharged in bankruptcy. For specific questions on whether or not a specific debt can be discharged in bankruptcy, speak to a Los Angeles bankruptcy attorney today.
