Typically, when you’re looking to discharge the majority, if not all of your debt, you look towards Chapter 7 bankruptcy. Unlike Chapter 13, in which you can set up a repayment plan, Chapter 7 allows you to wipe out your debt. Before filing for bankruptcy, it’s important to know what kinds of debt can be discharged.
Debts that can be discharged include:
- Credit card debt
- Collection agency accounts
- Unpaid rent and utility bills
- Car repossessions and unpaid balances
- Medical bills
- Foreclosure balances
- Personal loans
- Car accident claims
- Material supplier debt
Out of all the debt on the list above, credit card debt and loans are the most common types of debt that people look to get rid of when filing for bankruptcy. That includes department store credit cards and loans from payday stores, banks, and friends and family.
Note: Credit card use in the months or weeks before filing for bankruptcy will be scrutinized and can be seen as an intention to not pay. You will still be on the hook for it if this is the case.
Debts That Aren’t Usually Discharged
Depending on your case, certain debts may not be discharged. Below is a list of debts that cannot typically be discharged:
- Federal student loans
- Child support and alimony
- Fines, penalties and debt from breaking the law
- Certain tax debts
- Retirement plan loans
- HOA fees