What Debts Can and Cannot Be Eliminated in a Bankruptcy?

What Debts Can and Cannot Be Eliminated in a Bankruptcy?

Bankruptcy may make it possible for you to:

  • Eliminate the legal obligation to pay most or all of your unsecured credit card or medical bill debts. This is called a “discharge” of debts. It is designed to give you a fresh financial start.
  • Stop foreclosure on your house or mobile home and allow you an opportunity to catch up on missed payments. (Bankruptcy does not, however, automatically eliminate mortgages and other liens on your property without payment.)
  • Prevent repossession of a car or other property, or force the creditor to return property even after it has been repossessed.
  • Stop wage garnishment, debt collection harassment, and similar creditor actions to collect a debt.
  • Restore or prevent termination of utility service.
  • Allow you to challenge the claims of creditors who have committed fraud or who are otherwise trying to collect more than you really owe.

The following debts cannot be eliminated in a bankruptcy.

  • Child support orders Back child support, alimony obligations and other debts dedicated to family support.
  • Debts for personal injury or death caused by driving while intoxicated.
  • Student loans, unless it would be an undue hardship for you to repay.
  • Fines and penalties for violating the law, including traffic tickets and criminal restitution.
  • Recent income tax debts (within 3 years) and all other tax debts.
  • Debts you forget to list in your bankruptcy papers, unless the creditor learns of your bankruptcy case. Debts you incurred on the basis of fraud.
  • Credit purchases of $1,150 or more for luxury goods or services made within 60 days of filing.
  • Loans or cash advances of $1,150 or more taken within 60 days of filing.
  • Debts from willful or malicious injury to another person or another person’s property.
  • Debts from embezzlement, larceny or breach of trust.
  • Debts you owe under a divorce decree or settlement unless after bankruptcy you would still not be able to afford to pay them or the benefit you’d receive by the discharge outweighs any detriment to your ex-spouse (who would have to pay them if you discharge them in bankruptcy).

Seeking the advice of a qualified attorney is recommended as bankruptcy laws are quite complex. Having an experienced attorney representing you will ensure that your bankruptcy is filed properly, you are protected during the bankruptcy process, and to give you peace of mind.

For more than 20 years, attorneys Christopher Johnson, Charles Sclafani, Tanya Moriarty, and Diana Vellez Harris have provided practical solutions to a wide range of complex legal matters for clients in Western Massachusetts. Please contact the firm at 413-732-8356 for more information.