What Bankruptcy can do and what it can't do- dischargeable and non-dischargeable debts

A bankruptcy can discharge many debts but not all debts. It may relieve you of the obligation to pay credit card debts, medical bills, debts that arise from a personal guaranty or unsecured loans. However, not all debts are dischargeable. The Bankruptcy Code excepts from the discharge domestic support obligations, most student loan debt and most tax debt. Criminal fines and court restitution orders are also non-dischargeable. So, if you are filing for bankruptcy because you have traffic violations and those violations are deemed criminal fines, a bankruptcy will not relieve you of this debt. Debts arising from personal injury caused by operating a vehicle, vessel or aircraft while intoxicated are not covered by the discharge order. So, if you are being sued by someone that was injured by a car you were driving while drunk, a bankruptcy may not relieve you of a judgment entered against you in connection with that lawsuit. Other debts that will not be eliminated are mortgages and liens. Mortgages and liens are examples of secured debt or debt that is secured by property. A holder of a secured debt has a lien on the borrower's property as collateral in the event the borrower defaults in making loan payments. For example, if you do not pay your mortgage, the mortgage lender will have the right to seek to sell your home to satisfy the loan. If you borrow money to purchase a car, the lender may have a lien on your car and if you do not pay the loan, the lender may seek to repossess your vehicle. In bankruptcy, mortgages and liens will usually survive the discharge order. It is important to note that only debts that the debtor lists in the bankruptcy petition will be discharged and only debts incurred prior to the filing, or pre-petition, are dischargeable. There are also certain debts that are potentially non-dischargeable. What I mean by "potentially" is in order for those debts to be deemed non-dischargeable, the creditor must commence a lawsuit or what is called an adversary proceeding in the bankruptcy case and seek a judgment determining that the debt is non-dischargeable. A creditor may seek this relief if the debt arises due to a fraud committed by the debtor, or if the debt was incurred due to willful and malicious injury caused by the debtor. In addition, consumer debts owed to a single creditor for luxury items or services incurred in the ninety-day period prior to the filing are potentially non-dischargeable. So, it is a good idea to stop using your credit cards in the three months prior to the filing. In sum, while the Bankruptcy Code protects certain debts from being discharged, the discharge order will alleviate the debtor from many common liabilities, thereby offering the debtor debt relief. Consulting an experienced bankruptcy attorney to review your debts is important to determine how the bankruptcy will help.

#dischargeabledebts, #whatbankruptcywontdo