After a person successfully files bankruptcy, he or she obtains a debt discharge at the end of the process. With a discharge, a person is no longer personally liable for paying the debts. Creditors may not contact the debtor about the debts anymore, and they may not make any further collection attempts . People considering bankruptcy should know what types of debts they may discharge.
Dischargeable Debts
In general, a person may discharge any unsecured debt in bankruptcy. Common examples of unsecured debt include:
- Credit card debt
- Medical bills
- Past due rent
- Utility bills
In some cases, a person may not be able to discharge these debts, however, so it is important for those considering bankruptcy to know if their debts fall under the exceptions. For example, if a person incurs excessive credit card debt in the months just prior to filing a bankruptcy petition, the creditor may object to discharging that portion of the debt. It may appear to the court that a debtor intentionally ran up the balances on the credit cards, knowing that he or she was going to file bankruptcy, and never intended to pay the debt.
When lenders foreclose on homes or repossess cars and sell them, they often sue the borrowers for the difference between what the borrowers still owed on the loans and the amount of money for which the lenders sold the property, obtaining a deficiency judgment. In many cases a person may discharge deficiency judgments from home foreclosures and vehicle repossessions in bankruptcy. A debtor may also be able to discharge judgments that other creditors have obtained for non-payment of bills or judgments from some personal injury lawsuits.
Non-Dischargeable Debts
There are several types of debts that a person cannot discharge in bankruptcy, and the types of dischargeable debt may vary based on which chapter of bankruptcy a person files. Some of the most common debts filers have that they may not discharge include:
- Child or spousal support payments
- Student loans
- Some tax debts
Consult an Attorney
Bankruptcy laws are complex and people considering bankruptcy should consult with an attorney who can discuss their situations with them in detail and advise them of all of their options.
