Bankruptcy offers the opportunity to get on more solid financial footing through the discharge of debts. However, filing for Chapter 7 or Chapter 13 doesn’t necessarily mean you’ll have a completely clean slate once the process is complete.
The U.S. Bankruptcy Code lists a number of nondischargeable debts, or debts that cannot be erased through bankruptcy. Here, we explain which financial obligations will go away and which will remain yours when the Utah court issues a final decree to close your case.
Debts that are Dischargeable in Bankruptcy
Many types of debts can be wiped out in Chapter 7 and Chapter 13 bankruptcy. In all likelihood, you’ll no longer be responsible for paying any of the following:
- Medical bills
- Credit card balances
- Past-due amounts on utility bills
- Personal loans
- Leases and contractual obligations
- Promissory notes
You may also be relieved of other financial obligations, such as those resulting from a car accident or lawsuit judgment, but that’s not guaranteed. A bankruptcy attorney can determine whether you’ll be able to get these debts discharged.
Debts that Can Only Be Discharged in Chapter 13 Bankruptcy
Some debts won’t disappear if you file for Chapter 7, but filing for Chapter 13 can provide you with relief. Once your case is closed, your liability for these financial obligations should come to an end:
- Debts due to property settlement in separation or divorce proceedings
- Debts arising from willful and malicious property damage
- Debts incurred as a result of paying nondischargeable tax obligations
- Debts for loans taken out of your retirement plan
Filing a Chapter 13 claim may also eliminate certain non-criminal government fines and penalties, homeowner’s association fees incurred after filing and some debts that couldn’t be discharged in a previous bankruptcy case. To fully understand what Chapter 13 can do in terms of your specific situation, you’ll need to consult with a bankruptcy attorney.
Debts that are Nondischargeable in Bankruptcy
Whether you end up filing for Chapter 7 or Chapter 13 bankruptcy, you can expect some financial obligations to remain. Once your case ends, you’ll still need to pay these:
- Child support and alimony
- Criminal fines and traffic tickets
- Back taxes and tax penalties
- Debts not included in your bankruptcy petition
In addition, if you have any debts from personal injury as a result of driving under the influence of drugs or alcohol, they won’t be discharged. Neither will financial obligations arising from willful and malicious injury to another person.
What about student loans? These debts are almost never forgiven, but if repayment would result in undue hardship, a bankruptcy attorney can file an action to request that the Utah court discharge the loans.
Get Legal Advice from an Experienced Bankruptcy Attorney
If many of the debts you’re struggling to pay might not be dischargeable in Chapter 7 or Chapter 13, talk to an experienced bankruptcy attorney. A lawyer can explain your options and help you down the road to relief.
For expert legal advice in northern Utah and answers to your questions about filing for bankruptcy, contact the Law Office of Davis & Jones, P.C., today.