Will Bankruptcy Discharge All of My Debts?
In most instances, the answer is no. However,it depends on what your debts are.
The Bankruptcy Code allows a debtor to file bankruptcy to eliminate debts (Chapter 7) or set up a repayment plan to pay back debts (Chapter 13). Some debts that are not dischargeable in Chapter 7 can be discharge in Chapter 13. These include:
- Debts incurred to pay nondischargeable taxes
- Fees from a condominium, a cooperative, or a homeowners’ association
- Court fees
- Marital debts agreed to in a settlement agreement (excluding orders of support)
2 categories of debts generally not discharged in bankruptcy.
Examples of secured debt include your home mortgage and the loan on your car. If you wish to keep your home and/or car, you will likely need to reaffirm these debts with the creditor. If you do reaffirm, you will remain personally obligated to pay the debt and it will not be discharged in your bankruptcy. However, if you surrender the property, the debt will be included in your discharge and you will have no further responsibility for it. (In Chapter 13 cases, you may be able to strip junior liens, such as 2nd mortgages, and thereby convert them to dischargeable, unsecured debts).
Nondischargeable Unsecured Debts
These fall into 2 categories.
Filing bankruptcy will not discharge alimony, child support, recent income taxes, or fines/penalties to a governmental agency. Likewise, a bankruptcy will not discharge student loans, unless you can show that the student loan repayments are creating an “undue hardship.” These types of debts are simply not dischargeable and no action is required of the creditor.
May Be Nondischargeable
There are also debts which are not dischargeable if a creditor successfully objects. These include recent luxury items purchased within 90 days of filing, certain cash advances within 70 days of filing, debts obtained by fraud or false pretenses and debts that are the result of willful and malicious injury to another or their property. Creditors must timely object to the discharge of these debts. If the creditor fails to do so, they are dischargeable. If you are contemplating bankruptcy, contact our experienced Bankruptcy Attorney for your free consultation to discuss your specific situation so that we can guide you in the right direction. We are here to help!
(We are a debt relief agency and we help people file for bankruptcy relief under the Bankruptcy Code.)