What Debts Are Dischargeable in Bankruptcy?

Bankruptcy can be a complex and overwhelming process for individuals facing financial difficulties. One of the primary benefits of filing for bankruptcy is the discharge of debts, which provides a fresh start for individuals to regain financial stability. However, not all debts are dischargeable in bankruptcy.

What are Dischargeable Debts?

Dischargeable debts are those debts that can be eliminated through the bankruptcy process, meaning that the debtor is no longer legally obligated to repay them. In a Chapter 7 bankruptcy, most unsecured debts can be discharged, including credit card debt, medical bills, personal loans, and certain types of taxes.

Credit Card Debt

Credit card debt is one of the most common types of debts that can be discharged in bankruptcy. When a debtor files for Chapter 7 bankruptcy, credit card debt is typically included in the list of debts that are eliminated through the discharge process.

Medical Bills

Medical bills can also be discharged in bankruptcy, providing relief for individuals struggling with overwhelming medical expenses. By filing for bankruptcy, individuals can eliminate medical debt and focus on rebuilding their financial health.

Personal Loans

Personal loans, such as payday loans or personal lines of credit, are generally dischargeable in bankruptcy. These types of debts can be included in the bankruptcy filing and eliminated through the discharge process.

Taxes

While not all tax debts are dischargeable in bankruptcy, certain types of tax debts can be eliminated. For example, income taxes that meet specific criteria, such as being past a certain age and having been filed on time, may be dischargeable in bankruptcy.

What Debts are Not Dischargeable?

Not all debts can be discharged in bankruptcy. Debts that are typically not dischargeable include child support payments, alimony, most student loans, certain tax debts, and debts incurred through fraud or illegal activities.

Child Support and Alimony

Child support payments and alimony obligations are considered priority debts and cannot be discharged in bankruptcy. Individuals filing for bankruptcy must continue to fulfill these obligations even after receiving a discharge for other debts.

Student Loans

Most student loans are not dischargeable in bankruptcy unless the debtor can demonstrate undue hardship. This can be a challenging standard to meet, making it difficult for individuals to discharge student loan debt through bankruptcy.

Tax Debts

Some tax debts, such as recent income tax obligations and payroll taxes, are typically not dischargeable in bankruptcy. However, certain older tax debts or specific types of tax liabilities may be eligible for discharge under certain circumstances.

Debts Incurred Through Fraud

Debts incurred through fraudulent activities or illegal actions are generally not dischargeable in bankruptcy. If a creditor can prove that a debt was obtained through deceit or fraudulent means, it may not be eligible for discharge in bankruptcy.

Seeking Legal Guidance

Given the complexity of bankruptcy laws and the specific rules governing dischargeable debts, individuals considering bankruptcy should seek guidance from a knowledgeable bankruptcy attorney. A skilled bankruptcy attorney can assess the individual’s financial situation, determine which debts may be dischargeable, and guide them through the bankruptcy process.

For individuals in Roanoke, Virginia, seeking assistance with bankruptcy and understanding which debts are dischargeable, our law firm is here to help. Contact us today to schedule a consultation and take the first step toward a fresh financial start.