One of the first things people want to know is whether bankruptcy will actually get rid of their debts. The good news is that most of the debts that bring people to a bankruptcy attorney can be discharged. A few types of debt, however, usually survive bankruptcy.
Debts Bankruptcy Usually Erases
- Credit card balances
- Medical and hospital bills
- Personal loans and payday loans
- Past due utility bills
- Deficiency balances after a repossession or foreclosure
- Most civil judgments from collection lawsuits
- Old business debts you personally guaranteed
- Many unpaid rent balances owed to a former landlord
Debts That Usually Survive Bankruptcy
- Child support and alimony. Domestic support obligations are never discharged.
- Most student loans. Student loans are only discharged if you prove “undue hardship,” which requires a separate proceeding. Recent federal guidance has made this somewhat easier to pursue, so it is worth asking about.
- Recent income taxes. Older income taxes can sometimes be discharged if they meet specific timing rules. Recent taxes and payroll trust fund taxes generally cannot.
- Criminal fines and restitution.
- Debts for death or injury caused while driving under the influence.
- Debts from fraud or intentional injury, if the creditor objects and proves it in court.
What About Secured Debts?
Bankruptcy erases your personal liability on secured debts like car loans and mortgages, but the lien on the property remains. That means if you want to keep the car or the house, you need to keep paying. If you give the property back, you will not owe the remaining balance.
Chapter 13 Can Help With Debts That Survive
Even when a debt cannot be discharged, Chapter 13 can stop collection and give you three to five years to pay it through your plan, without additional penalties piling up on many tax debts.
Talk to an Orange County Bankruptcy Attorney
Every situation is different, and the right choice depends on your income, your property and your goals. Call Madaen Law at (714) 782-7275 or send us a message for a free consultation. We help clients throughout Orange County, Los Angeles County and San Diego County.
Disclaimer: This article is for general informational purposes only and is not legal advice. Reading this article, or contacting us through this website, does not create an attorney client relationship. Bankruptcy laws, exemption amounts and court procedures change over time, and the right approach depends on the specific facts of your situation. Please consult a licensed attorney before making any decision about your case.
This website may be considered attorney advertising. Prior results do not guarantee a similar outcome. Law Office of Madaen, Bahram Madaen, Attorney at Law, licensed in California.
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.
0 Comments