Will Bankruptcy Eliminate All My Debts or Are There Exceptions?

Bankruptcy can be a crucial lifeline for people drowning in overwhelming debt, offering a fresh start and a chance to regain control of their financial lives. However, it’s important to understand that not all debts can be wiped away through bankruptcy. There are exceptions and limitations to what bankruptcy can achieve. In this article, we’ll explore the debts that bankruptcy can eliminate and those that may survive the process.

Debts That Can Typically Be Eliminated in Bankruptcy:

1. Credit Card Debt: Credit card debt is generally dischargeable in bankruptcy. This includes outstanding balances, interest, and penalties.

2. Medical Bills: Unpaid medical bills can be discharged through bankruptcy, providing relief to individuals burdened by unexpected healthcare expenses.

3. Personal Loans: Debts from personal loans, such as loans from family or friends, are usually dischargeable.

4. Utility Bills: Past-due utility bills, like electricity or water bills, can usually be eliminated through bankruptcy.

5. Collection Accounts: Debts that have been sold to collection agencies or are in collections status can often be discharged.

Debts That May Survive Bankruptcy:

1. Secured Debts: Secured debts, such as mortgages and car loans, are generally not discharged in bankruptcy if you wish to retain the collateral (e.g., your home or car). However, bankruptcy can help you manage these debts by restructuring payments.

2. Student Loans: Student loan debts are typically not dischargeable unless you can demonstrate “undue hardship,” which is a high legal standard to meet.

3. Child Support and Alimony: Bankruptcy does not eliminate obligations for child support or alimony payments.

4. Certain Tax Debts: Some tax debts may survive bankruptcy, depending on factors like the type of tax, the age of the debt, and whether you filed accurate tax returns.

5. Court-Ordered Fines and Restitution: Fines and restitution orders resulting from criminal convictions are usually non-dischargeable.

6. Debts Incurred Through Fraud or Misrepresentation: Debts incurred through fraudulent activities, such as credit card fraud, or debts obtained by providing false information, may not be discharged.

While bankruptcy can offer much-needed debt relief, it’s crucial to recognize that not all debts will disappear. Understanding the types of debts that bankruptcy can eliminate and those that may persist is a critical step in managing your financial future. It is also important to remember that even if a certain debt cannot be eliminated in bankruptcy, you may still be able to have a more affordable payment plan on those debts during bankruptcy.

If you are considering bankruptcy, we can provide the support you need to help you navigate the process. We will assess your unique situation, determine the type of bankruptcy that best suits your needs, and guide you through the process while ensuring that you maximize the discharge of your eligible debts.

Contact us by calling 205-875-8197 or by using the contact form below. We look forward to helping you!