Which debts are discharged in a consumer Chapter 7 and 13 bankruptcy?
The purpose of filing for either a Chapter 7 or a Chapter 13 bankruptcy is to eliminate or alter your responsibility for dischargeable debts you may not be able to pay. When the debts that you owe are forgiven and you become no longer responsible for repaying them as a result of your bankruptcy, this is referred to as a discharge of the debt. Both Chapter 7 and Chapter 13 result in some portion of your debts being discharged, although the time when this discharge occurs and the eligibility requirements differ. However, while you may be able to have many of your debts discharged through one of these two legal processes, not all debts are dischargeable or eligible for inclusion in a bankruptcy filing.
Which Debts Are Dischargeable in Bankruptcy?
There are a number of different types of debt that can be discharged through Chapter 7 or Chapter 13. These types of bankruptcies are the most common forms of consumer bankruptcies and most of the debts that are discharged or wiped out are various forms of "consumer debts," i.e. - debts related to your household. The most common debts that you may get rid of are:
- Past due utility bills
- Some civil court judgments
- Credit and charge card bills
- Department store and gasoline company bills
- Personal loans from family and friends
- Newspaper and magazine subscriptions
- Legal, medical and accounting bills
- Auto accident personal injury claims caused by the debtor driving intoxicated
- Gym contracts
- Social security overpayments
- Dishonored personal checks
- Most unsecured loans (e.g., debts for which there is no collateral)
- Under certain circumstances, you may also be able to discharge older unpaid back tax obligations. See: "Will bankruptcy discharge my past-due income taxes?" to see if this exception would apply to your situation.
Which Debts Are Not Dischargeable?
Debts that you may not generally discharge in either a Chapter 7 or a Chapter 13 bankruptcy include:
- Support payments, such as unpaid child support.
- Some types of court judgments, such as a judgment against you for damages for drunk driving
- Student loan debts
- Secured debts (such debts may be dealt with by returning the collateral or by redemption or reaffirmation of the debt)
These, and certain other types of debts, are not dischargeable in either a Chapter 7 or a Chapter 13 for public policy reasons. For example, courts do not believe it is in the best interests of a child or of society as a whole to allow a parent to wipe out his obligation to pay support to that child in a bankruptcy.
If you are concerned about whether filing bankruptcy will help you to deal with your debts or not, it is in your best interests to consult with an experienced attorney.