If a debtor is dealing with a dire financial crisis and there is nothing that they can do about it, bankruptcy can be the ideal way to come out of the situation. If you are filing bankruptcy, you will be able to keep a home that has been foreclosed on. Or you might keep a car that is supposed to be repossessed. Also, it can stop creditors from hounding you for payments. Apart from that, once you file the bankruptcy, it might eliminate completely a wide variety of debts. Even though this brings a lot of perks, it is also important for you to know which types of debts won’t be eliminated with the bankruptcy filing. Talk to an experienced Pittsburgh bankruptcy lawyer who will be able to help you with this.Dischargeable and Non-Dischargeable Debts
When you are filing bankruptcy, no matter if it is Chapter 13 or chapter 7, it will divide the debts into two categories, dischargeable and non-dischargeable. The word “dischargeable” is legal jargon that denotes the debts that can be eliminated. After successful completion of bankruptcy, the result is also called discharge. So, the non-dischargeable debts are those that cannot be eliminated after filing bankruptcy.
That is why our Pittsburgh bankruptcy lawyer suggests that you first need to know which type of debts are not going to be discharged when you file bankruptcy.Types of Dischargeable and Non-Dischargeable Debts
Whether a debt is dischargeable or not depends on the chapter you are filing bankruptcy for. Generally, when you are left with limited financial resources, you will file for chapter 7 bankruptcy which will eliminate most of the debts. This is not the case when you are filing Chapter 13 bankruptcy.
When you are filing Chapter 7 bankruptcy, the following types of debts will be eliminated:
- Medical bills
- Utility bills
- Personal loans
- Debts that have been incurred from credit card
- Debts you have incurred from business
However, if the debtor is involved in fraudulent activity, the dischargeable status should be dismissed.
For Chapter 13 bankruptcy, the dischargeable debts are more limited. For people with more financial resources get approval for chapter 13 bankruptcy.
Dischargeable debts in chapter 13 are:
- Medical bills
- Debts that have been incurred from credit cards
- Personal loan
For both chapter 13 and chapter 7, the non-dischargeable debts are pretty consistent. Even though the chapter determines the dischargeable debts, the non-dischargeable ones are more or less the same. The non-dischargeable debts are:
- Student loan
- Child support payments
- Spousal support payments or alimony
- Different types of debts incurred from taxes
- Debts that result from criminal activity like penalties from DWI cases
For a better and more comprehensive idea of the dischargeable and non-dischargeable debts, you can read 11 USC § 523.
If you are looking for more sound financial advice, consult our Pittsburgh bankruptcy lawyer at Pittsburgh Bankruptcy Law Group.