What Debts Are Forgiven Through Bankruptcy?
When you file for bankruptcy there are certain debts that you can completely discharge. That means you will not have to ever pay those debts off. It also means that your creditors can no longer bother you about collecting on those debts. However, in order 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 the Law Office of Kevin M. Schmidt, we will help you understand which debts can and can’t be discharged.
Dischargeable Debts In Bankruptcy
The good news is that there are several common types of debt that are usually considered dischargeable when you file for bankruptcy.
- Typical dischargeable debts include:
- Medical bills
- Credit card bills
- Repossessed vehicle deficiencies
- Foreclosed homes deficiencies
All of 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
There are certain debts that you are still responsible to pay even if you file for bankruptcy. These are known as non-dischargeable debts and you will be obligated to pay them off despite choosing bankruptcy.
Typical Non-Dischargeable debts usually include:
- Student loans
- Child support and/or spousal support
- The majority of tax debts
- Debt that is not listed by the debtor
- Any criminal fines or restitution
Secured Debt With Chapter 7 and 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 will need to create a payment plan in order to pay off the balance owed or even just the fair market value of the vehicle. In either case, you only have to 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 fair market value of the vehicle in situations where the amount owed is substantially more than what the vehicle is worth.
Contact Us for More Help With Bankruptcy
At the Law Office of Kevin M. Schmidt, 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 his or her own unique set of circumstances. We carefully look at each case we deal with and determine what path is best for that particular case. You can trust our experienced bankruptcy team with your bankruptcy process. Please contact us at your earliest convenience to set up a meeting to discuss your case more in-depth. Call us today at 219-756-0555, or click here to contact us online.