As an individual contemplating filing for bankruptcy, you may be wondering what a discharge is and what types of debts can be discharged through bankruptcy. The bankruptcy discharge releases the debtor from personal liability for certain types of debts. This means that once a debt is “discharged” through bankruptcy, the debtor is no longer legally required to pay those debts. The discharge itself is a permanent order that prohibits creditors from collecting on discharged debts, and this includes all forms of legal action and communication with the debtor such as phone calls and letters.
Not all debts can be discharged through bankruptcy. The types of debts that can be discharged vary depending on which Chapter the person files. Under Section 523(a) of the Bankruptcy Code, one can find those specific debts that are not dischargeable in bankruptcy for public policy reasons; for example, debts incurred based on improper behavior of the debtor, or because of the nature of the debt such as child support obligations. The most common types of nondischargeable debts include the following:
- Certain tax debts
- Child support obligations
- Spousal support or alimony
- Debts from willful or malicious injuries to persons or property
- Government fines or penalties
- Guaranteed educational loans
- Government funded loans
- Benefit overpayments
- Debts for personal injury actions involving drunk driving
- Debts for certain tax advantage retirement plans
- Certain condominium or cooperative housing fees
While this list of nondischargeable debts may seem extensive, many individuals have debts that only fit in one or two of the above categories; therefore, for most debtors filing a Chapter 7 or Chapter 13 bankruptcy is still a viable alternative to doing nothing. Whether you qualify for a Chapter 7 and are eligible to discharge medical debts, credit card debts, taxes over three years of age, and personal loans etc., or if you are more suited for a Chapter 13 debt reorganization bankruptcy, you still may benefit dramatically by filing for bankruptcy relief.
Since opening my firm in 2000, I have handled more than 7,000 bankruptcy filings, and I would be happy to help you determine if bankruptcy is right for you through a free case evaluation. Contact me today to get started examining your debt relief options!