The type of debts that are dismissed depend on wether you file a Chapter 7 or a Chapter 13 A wider range of debts can generally be discharged in a Chapter 7 than a Chapter 13 bankruptcy. If you have a substantial amount of debt that can only be discharged under a Chapter 13 bankruptcy than filing a Chapter 13 is probably a better option for you.
With either a Chapter 7 or Chapter the majority of typical filers debts are discharged. Keep in mind that only debts incurred before filing bankruptcy will be discharged, any debt you incur after the filing will not be affected by the bankruptcy. Also, it is important to remember that debts that would otherwise be discharged in a bankruptcy might not be if they are related to misconduct or fraud on your part.
All debt that is not secured and is not excluded from being discharged by the bankruptcy law should be able to be discharged under the bankruptcy law. The most common types of unsecured debts that are eliminated by filing bankruptcy are listed below.
Credit Card Debt (including overdue and late fees)
The vast majority of bankruptcy filers have credit card debt that would like to eliminate throughout the filing. Except in rare cases like fraud or significant recent luxury purchases this debts are dischargeable.
Large medical bills are often an unexpected expense and a major reasons that people file for bankruptcy. All to the debts incurred due to the illness that are not covered by insurance are dischargeable through bankruptcy.
Civil Court Judgements and Obligations Due to Breach of Contract
Civil court judgments can be discharged through a bankruptcy filing unless they are related to a judgement for willful or malicious injury to an individual. Also, any judgements or debts owed because of a breach of a contract can be discharged through filing bankruptcy.
Personal Loans Including those from Friends and Family
Personal loans are generally unsecured and can be discharged through bankruptcy. If the loan is secured by property than they will be treated as any other secured loan and you can discharge your obligation to the pay the debt but the creditor can take the property secured by the loan.
You can discharge your past due utility bills through filing bankruptcy. The filing also legally prevents the utility company from turning off your services for a period of 20 days after the filing. To continue to receive service after 20 days you need to provide the utility company with “adequate assurance” that you will pay your ongoing bills generated after the bankruptcy filing. The assurance necessary varies but it generally is some type of cash deposit or similar financial guarantee.
Repossession and Foreclosure Deficiency Balances
Ofter when a secured property is reposed the property might not cover the entire outstanding amount of the loan and you will be assed for the deficiency. This debt can be discharged. While foreclosure law is more complex, this can also happen when a home is foreclosed on and sales proceeds of the home do not cover the outstanding balance on the mortgage. Generally, your personal obligation to pay this foreclosure balance can be eliminated by filing bankruptcy.
Past Due Rent and Lease Agreements
Past due rent and other money owed under lease agreements can be discharged.
Keep in mind that this is not a comprehensive list of the non-priority unsecured debts that can be eliminated through bankruptcy. Also, even many of the types of debt that are excluded from being discharged in a bankruptcy have common exceptions.
Bankruptcy is complex and many answers depend upon your specific situation. If you still have questions you can schedule a free consultation with a bankruptcy attorney.