What Debts Are Discharged In Bankruptcy?

a person using a calculator

Bankruptcy helps people discharge debts to obtain debt relief. Discharge releases debtors from personal liability for their debts, and it prevents creditors from taking collection actions against them. If you're considering filing for bankruptcy during the COVID-19 pandemic, you might be wondering what debt bankruptcy can wipe out. Our Los Angeles bankruptcy attorneys explain what debts are discharged in bankruptcy.

Dischargeable Debt In Chapter 7 Bankruptcy

The Bankruptcy Code lists 19 categories of debt that can be discharged under Chapter 7 bankruptcy. Everything that does not fall under the categories below won’t be dischargeable in Chapter 7 bankruptcy.

Below are the categories of debt that can be erased with Chapter 7 bankruptcy:

  • attorney fees (except child support and alimony awards)
  • auto accident claims (except those involving drunk driving)
  • business debts
  • civil court judgments (unless based on fraud)
  • collection agency accounts
  • credit card charges (including overdue and late fees)
  • dishonored checks (unless based on fraud)
  • medical bills
  • money owed under lease agreements (includes past due rent)
  • personal loans from friends, family, and employers
  • repossession deficiency balances
  • revolving charge accounts (except extended payment charges)
  • social security overpayments, and
  • student loans (only in the rare circumstance that you can prove undue hardship)
  • tax penalties and unpaid taxes past a certain number of years
  • utility bills (past due amounts only)
  • veterans assistance loans and overpayments.

Dischargeable Debt In Chapter 13 Bankruptcy

When you complete your Chapter 13 repayment plan, you will be able to discharge the remaining qualifying balance. Chapter 13 bankruptcy is broader than Chapter 7 discharge because it wipes out debts that are non-dischargeable in Chapter 7 bankruptcy.

Below are the categories of debt that can be erased with Chapter 13 bankruptcy:

  • Credit card debt
  • Medical bills
  • Personal loans not secured by collateral
  • Older tax obligations
  • Breach of contract or negligence related debt
  • Willful and malicious property damage
  • Debts incurred to pay non-dischargeable taxes
  • Debts arising out of divorce or separation property settlement
  • And more

If you're considering filing for bankruptcy, our Los Angeles bankruptcy attorneys are here to help you. Get in touch with us today at (800) 996-9932 to schedule a virtual consultation!

Related Posts
  • What You Should Know About Bankruptcy if You’re Self-Employed Read More
  • 4 Tips on How to Settle Your Medical Bills Read More
  • Can You File Bankruptcy for Personal Loans? Read More