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What Debts Are Forgiven Through Bankruptcy

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What Debts Are Forgiven Through Bankruptcy?

When you file for bankruptcy, there are certain debts that you can completely discharge. That means you will never have to pay those debts off. It also means that your creditors can no longer bother you about collecting on those debts. However, for you to be able to eliminate a debt it must be a dischargeable debt. In other words, not all kinds of debt can be discharged when you file for bankruptcy. At Whitten & Whitten, we will help you understand which debts can and can’t be discharged.

Dischargeable Debts In Bankruptcy

The good news is that several common types of debt are usually considered dischargeable when people file for bankruptcy.

  • Typical dischargeable debts include:
  • Medical bills
  • Credit card bills
  • Repossessed vehicle deficiencies
  • Foreclosed homes deficiencies
  • Judgments

These types of debts can be discharged, which means you will not be responsible for paying them off when you file for bankruptcy. It also means your creditors cannot continue trying to collect on them.

Non-Dischargeable Debts In Bankruptcy

Certain debts are still your responsibility to pay, even if you file for bankruptcy. These are non-dischargeable debts, and you must pay them off despite choosing bankruptcy.

  • Student loans
  • Child support and spousal support
  • The majority of tax debts
  • Debt that the debtor does not list
  • Any criminal fines or restitution
Secured Debt With
Chapter 7 & Chapter 13

Meanwhile, if you have any secured debt, like a loan for a vehicle, there are two options. If you choose Chapter 13 Bankruptcy, you must create a payment plan to pay off the balance owed or even just the vehicle’s fair market value. In either case, you must only pay 5.25% interest on the vehicle debt. If you choose Chapter 7 Bankruptcy, you can simply return the vehicle to your lender and be free of making any more payments. You could also keep the car by making one lump-sum payment to the lender for the vehicle’s fair market value in situations where the amount owed is substantially more than the car is worth.

Contact Us for More Help With Bankruptcy

At Whitten & Whitten, we can help you determine which debt you can target in bankruptcy and which type of bankruptcy would benefit you the most. Every situation is different, and we know that each person has their own unique set of circumstances. We carefully look at each case we deal with and determine the path best for that particular case. You can trust our experienced bankruptcy team with your bankruptcy process. Please get in touch with us at your earliest convenience to schedule a meeting to discuss your case more in-depth. Call us today at 219-756-0555, or click here to contact us online.

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