Which debts are dischargeable in bankruptcy?

Recent job loss, mounting medical bills or perhaps some other unexpected money problem is taking control of your life.  You can’t pay; you’re sinking in debt through no fault of your own, and are desperately in need of a fresh start.  You have done your homework, and you know that bankruptcy is the best option for you.  You’re certain it will provide some relief at this point, but you are very unclear about which debts will be eliminated in your bankruptcy, and which ones will not.

When you file for chapter 7 bankruptcy protection, the bankruptcy court will weigh your case against the interests and rights of your creditors when deciding which debts to eliminate.  The court will officially forgive (discharge) some of your debts after reviewing your case but others may be determined to be non dischargeable under existing bankruptcy law.   Bankruptcy is not a free pass altogether, certain laws will restrict some types of debt from bankruptcy protection.

The most easily and most commonly discharged consumer debts include medical bills, credit card debts, collection accounts, vehicle loans, home mortgages, personal loans, most auto accident claims, utility bills, unpaid rent, personally guaranteed business debts, government overpayments etc. In fact, the majority of consumer debts can be discharged through a bankruptcy.

Debt types that are much more difficult, albeit not impossible, to discharge on the other hand include things like child support payments, alimony, federal student loans, certain tax liabilities, DUI judgments, criminal restitutions etc.  Bankruptcy is almost always the best solution, but that doesn’t mean every debt is automatically forgiven when you file.  Some may be trickier to eliminate than others.

Even if debts are categorized as “non-dischargeable” a good attorney will explore every possible way to help you eliminate them.  If a debt can’t be discharged then they will help you understand what happens next and how to best handle the collectors at that point.

At the end of the day, when thinking about bankruptcy you will want to know if you have a debt that will likely be considered to be non dischargeable before you decide to move forward.  After all, bankruptcy is a big decision and you will want to know what you are up against.

That being said, it is very important to remember that even if you have a non-dischargeable debt, bankruptcy may still be your best option.  What we see in our office is that the clients that have a non-dischargeable debt also have debts that will be easily cleared in their bankruptcy.  Getting rid of some these debts always makes it much easier to pay for the others.

If you live in New York and are considering bankruptcy relief please contact the Law Office of William Waldner for a free bankruptcy consultation today.  We only practice Bankruptcy Law and are always here to help.  You’ll see that even with debts that can’t be discharged, bankruptcy relief is still the best solution for consumers with extreme financial hardship.  

Call 212-244-2882 to arrange a free bankruptcy consultation today.  Mention this blog post when scheduling by referencing the promotional code: DCR212 to receive the required 3 bureau credit report, and required credit counseling course, both free with any signed retainer agreement.

This article is intended for educational purposes only. By reading this article no attorney-client relationship has been created.

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