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What debts get discharged in bankruptcy?

Many people know that one of the major benefits of filing bankruptcy is the debt discharge that the court issues at the completion of the process. What some people may realize is that not all debts are eligible for discharge in bankruptcy. Those who are struggling to make ends meet and considering bankruptcy should be aware of the types of debts they can and cannot discharge, as well as the benefits that bankruptcy offers even though some debts may remain for people after filing.

Chapter 7 debt discharge exemptions

Federal bankruptcy law lays out 19 different types of debts that a person cannot discharge in a Chapter 7 bankruptcy. The most common types of nondischargeable debt that people carry include:

  • Unpaid taxes
  • Other fines or penalties owed to the government
  • Domestic support obligations, including spousal and child support
  • Student loans
  • Government benefits overpayments
  • Debts owed for intentional property damage
  • Debts owed resulting from personal injury caused while drunk driving
  • Unpaid loans from tax-advantaged retirement plans
  • Some condominium or housing cooperative association fees
  • Debts a person did not include in the bankruptcy petition

Chapter 13 debt discharge exemptions

People who choose to file Chapter 13 bankruptcy can discharge some of the debts that are not available for discharge under Chapter 7 because people pay down some of the debt through the Chapter 13 repayment plan. People may be able to discharge the following types of debt at the end of a Chapter 13 bankruptcy repayment plan:

  • Debts a person acquired for paying nondischargeable tax debts
  • Debts owed for intentional property damage
  • Debts stemming from divorce property settlements or separation proceedings

Talk to a lawyer

Even though people may have some debts that remain after a bankruptcy debt discharge, filing bankruptcy can still have many benefits for those who are struggling to make ends meet. After a person discharges all the debts possible in bankruptcy, he or she is in a better place to reorganize finances. Bankruptcy can help eliminate debts that often carry exorbitant interest rates, such as credit card debt and unsecured loans. Many find it easier to make payments on nondischargeable debt once they no longer have to concern themselves with the debts they discharged in bankruptcy.

If you have been thinking about filing bankruptcy and are uncertain if it is the best option for your situation, seek the advice of a knowledgeable debt relief attorney who can help you decide whether bankruptcy is right for you.