It’s often the case that North Carolinians facing financial trouble and thinking about bankruptcy don’t understand all of the important details about the process. One common misunderstanding is that once a bankruptcy has been filed all your debts are immediately discharged, meaning you can start anew with a blank financial slate. Sadly, that is not always the case as there are some categories of debt that cannot be discharged during the bankruptcy process. Though this may not affect everyone, it’s important to understand which debts are and which debts are not dischargeable before beginning the bankruptcy process.
What does it mean to “discharge” a debt?
So how do you know which categories of debt are dischargeable and which aren’t? Start by looking at the bankruptcy code. Section 523(a) of the Bankruptcy Code contains a list of which debts cannot be discharged during a bankruptcy. This means that if your debts fall into one of the listed categories even if you prevail in your bankruptcy filing you will still be responsible for paying back the money owed.
What is not dischargeable?
Some good examples of debts that are not dischargeable during bankruptcy include things like child support and alimony arrearages, back taxes, many if not most student loans, debts that were not disclosed by the debtor and certain personal injury judgments and, oddly, debts that are related to housing fees. Also, debts that were acquired by fraud and debts that are related to criminal penalties or restitution are not eligible for discharge.
What is dischargeable?
You might be wondering what kinds of debts are dischargeable? Common examples include things like credit card debt, medical bills, personal loans, car loans and utility bills. These categories include debt that can be wiped out by a bankruptcy filing meaning that once your bankruptcy is complete you are not longer obligated to pay the debts and creditors cannot attempt to collect money from you.
Does the type of bankruptcy matter?
It’s important to note that the chapter of bankruptcy filed can also impact which debts are dischargeable. For instance, you cannot eliminate nondischargeable debts through a Chapter 7 bankruptcy. In Chapter 13 bankruptcy, nondischargeable priority debts will have to be paid in full through your repayment plan. This means that if you have any priority debts, you must pay them off before you can even receive your discharge.
If you find yourself needing the services of a Charlotte, North Carolina bankruptcy attorney, please call the skilled lawyers at Arnold & Smith, PLLC today at (704) 370-2828. As professionals who are experienced in the bankruptcy arena, our attorneys will provide you with the best advice for your particular situation.
“Discharge In Bankruptcy,” published at USCourts.gov.
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