For many people, discharging debt is a primary goal of bankruptcy. However, you may be wondering, “Does bankruptcy clear all debt?” The answer is, it depends. Read below to learn more about what types of debt can be eliminated in bankruptcy. For more information about your specific situation, contact Ryan J. Really, Attorney at Law, PLLC.
What Is Debt Discharge?
Discharge occurs when a debt is completely eliminated through bankruptcy. It wipes your slate clean of the debt. Although it may still appear on your credit report for several years, you do not have to repay a debt that was discharged.
Chapter 7 bankruptcy discharges most or all of your debts. However, only some of your debts may be discharged in a Chapter 13 after your payment plan is completed. Additionally, some types of debt may not be discharged.
What Types of Debt Are Dischargeable?
While the goal of bankruptcy is to get rid of debt, there are some types of debt that cannot be discharged through Chapter 7 or Chapter 13.
There are two broad categories of debt: pre-filing debt and post-filing debt. When you file your bankruptcy, anything accrued before you file is considered pre-filing debt. That debt will be included in your bankruptcy and considered for discharge. Your post-filing debt, such as bills that accrue after you file, will not be considered for discharge.
Within the category of pre-filing debt, there are other types of debt. Some of those may not be dischargeable. Some examples of non-dischargeable debt include:
- Past due child support or alimony
- Some tax debt
- Criminal charge fines
- Student loans
Dischargeable debt includes things like:
- Medical bills
- Credit card charges
- Collection agency accounts
- Past due utility bills
- Attorney fees
- Social security overpayments
- Repossession deficiency balances
- Business debts
- Civil court judgments (unless they involved fraud)
Before determining which of your debts is dischargeable, you should consult with an attorney. There are many variables that may change the circumstances. Even student loans may be discharge in certain situations.
What is Reaffirmation of Debt?
If your debt is dischargeable, it is able to be eliminated through bankruptcy. However, if you reaffirm that debt during or after bankruptcy, you may still have to pay it.
There are certain situations where you want to reaffirm a debt. If you own a home and do not want to lose it, you may sign a reaffirmation agreement and continue making payments.
Reaffirmation is common for vehicles as well. Instead of including your car in a bankruptcy and risking having to sell it to repay some of your debts, you may be able to reaffirm the debt and keep the vehicle.
Can I Keep Property in a Bankruptcy?
Yes. You can keep much of your property through a bankruptcy.
Although Chapter 7 is considered “liquidation bankruptcy,” and you may be expected to sell some of your property to repay debts, there are exceptions.
Chapter 13 is geared to help you keep your property while you structure a manageable payment plan.
Can Bankruptcy Stop an Eviction or Repossession?
Yes. Bankruptcy immediately stops all legal actions against you when you file. However, if there is already a court judgment against you, these actions may continue in certain situations.
Contact a Bankruptcy Attorney Today for Help
If you have a lot of past due accounts, you are likely wondering, “Does bankruptcy clear all debt?” In many cases, it can. You may be able to start over with a clean slate. However, there are some exceptions.
You should work with a knowledgeable bankruptcy attorney to find out which debts can be eliminated. Call Ryan J. Really, Attorney at Law, PLLC to find out.