Not all debts are treated equally in bankruptcy. Many types of debts can be erased through bankruptcy, while others cannot. Debts are classified as either dischargeable or nondischargeable.
Dischargeable Debts Erased in Bankruptcy
Dischargeable debts are debts that can be erased in bankruptcy. Common dischargeable debts include:
- Credit card debt
- Medical debt
- Collection agency accounts
- Personal loans from family or friends
- Certain judgments from lawsuits (and pending lawsuits)
- Older tax debts
If most of your debts are dischargeable, then bankruptcy may be the right solution for you to get out of debt.
Nondischargeable Debts that Survive Bankruptcy
Nondischargeable debts are debts that survive bankruptcy, they cannot be erased through bankruptcy and must be paid back. Common nondischargeable debts include:
- Spousal or child support obligations
- Student loans
- Fines imposed from a government body
- Debts incurred by fraud: debt for money, property, or services, to the extent such debt was obtained by false pretenses, a false representation, or actual fraud.
- Debts resulting from illegal activity
- Certain tax debts, including new tax liabilities
- Certain debts incurred right before filing for bankruptcy: consumer debts owed to a single creditor totally more than $675 for “luxury goods or services” incurred within 90 days before filing for bankruptcy are “presumed to be nondischargeable.” 11 U.S.C. § 523(a)(2)(C)(i)(I).
- *This list is not exhaustive. Due to either the type of debt you owe, or when or how it was incurred, you may have other debts that are also nondischargeable.
If the majority of you debts fall into the above nondischargeable categories, then bankruptcy may not be the right solution for you.
However, even if the bulk of your debts are nondischargeable, it is worth exploring if filing for Chapter 13 bankruptcy could help you. Chapter 13 would allow you to create a three to five year repayment plan to pay back your debts.
Understanding How Bankruptcy Can Help You Get Out of Debt
Many people who file come out of bankruptcy debt free. Though, some people have debts that must be paid back even after successfully filing for bankruptcy. If you’re considering filing for bankruptcy protection it is important for you to know which of your debts can and cannot be erased.
We offer free consultations to anyone in Savannah, GA or the surrounding areas. Together we’ll explore your debts and how bankruptcy can help you and your family.
Call us today at (912) 351-9000 or contact us here to schedule your free consultation.
We are a debt relief agency. We help people file for bankruptcy relief under the U.S. Bankruptcy Code.