Bankruptcy can be a very powerful tool when it comes to gaining financial independence. The biggest benefit of bankruptcy is the discharge given to the debtor when a bankruptcy case is complete. However, not all debt is eligible to be discharged by bankruptcy. Below you’ll find a guide that explains which debts can and cannot be discharged by bankruptcy.
There are types of debts that have the ability to be discharged through both Chapter 7 and Chapter 13 bankruptcies. These debts tend to be some of the most common debts that individuals have and far outweigh debts that cannot be discharged through bankruptcy.
Here is a list of debts that can be discharged by both Chapter 7 and Chapter 13:
- Credit card debts
- Medical bills
- Promissory notes
- Personal loans
- Obligations under leases and contracts
- Most debts stemming from car accidents
- Lawsuit judgments against you
There are certain types of debts that cannot be discharged by Chapter 7, and only discharged by Chapter 13:
- Marital debts from divorce (not including alimony/child support
- HOA, condo, coop fees
- Court fees
- Debts from retirement plan loans
- Debts that were unable to be discharged in a previous bankruptcy
When a debt is not discharged by bankruptcy, is usually falls under one of three categories of non-dischargeable debts:
- It can simply never be discharged
- It cannot be discharged unless you successfully argue it should be
- It will not be discharged if a creditor can successfully argue why it shouldn’t be
Debts that can simply never be discharged are:
- Child support
- Criminal fines, penalties, and restitution
- Certain taxes
- Personal injury debts stemming from driving under the influence
Student loan debt is really one of the only debts that you successfully argue a discharge for. To do so, you need to successfully prove in court that you would reasonably not be able to pay back the loan.
There are also debts that creditors have the ability to challenge if they feel entitled to a certain amount of compensation. Debts that creditors can argue against a discharge for include:
- Debts from fraud
- Debts gained from willfully malicious acts
- Debts from larceny, embezzlement, and breach of fiduciary duty
- Any debts or creditors that you failed to include in your bankruptcy papers
Contact Our New York Bankruptcy Team Today
We understand that filing for bankruptcy can, at times, be stressful and confusing. At The Law Office of Julio E. Portilla, we are committed to helping lift the fog that hangs over bankruptcy and get you even closer to financial freedom.
If you or a loved one is interested in learning more about bankruptcy, don’t hesitate to contact us through our website, or give us a call at (917) 909-6166!