subject: The Meaning Of Bankruptcy Dischargeable Debts [print this page] Getting rid of their debt is the prime motivator prompting most people to file for Chapter 7 bankruptcy. In most cases, the majority of their debts will be wiped out. These are the so-called dischargeable debts. So what exactly are these?
The biggest class of debts that people want to get out from under when they enter a bankruptcy court is credit card debts. And, luckily for them, credit card debts, except in the case of intentional fraud, are normally discharged once the bankruptcy is approved.
But, it is crucial that you have not run up any unusual and huge charges on your credit card before you file for bankruptcy. Doing so may indicate an attempt on your part to deceive the credit card company. It may be an indication to the court that you knowingly tried to get all the benefit from you credit cards before filing for bankruptcy in an attempt to have them discharged. The court does not look favorably upon this and considers it fraud.
A catastrophic sickness to a family member can financially wipe out that person. And, indeed, overwhelming medical bills are the second most popular reason for many people filing for bankruptcy. For example, perhaps your wife has developed a disease that has resulted in thousands or hundreds of thousands of medical bills. Unable to repay these bills back, many people file for bankruptcy with the hope of having them discharged. Fortunately, medical bills are dischargeable if your bankruptcy filing is approved. The amount of dollars discharged by the bankruptcy courts due to unpayable medical bills runs into the billions of dollars.
If a creditor has sued you, and won a judgment against you, he is entitled under the law to collect the money owed to him by a number of different ways. He can garnish your salary, place a lien on properties that you own, garnishee your bank accounts, and more. Once you file for bankruptcy, however, most of these debts become dischargeable under the law.
This is also the case for any contractual agreements that you may has signed. For example, if you have signed an automobile lease or if you have entered a membership program that requires a certain number of payments - these are dischargeable debts.
These are only a subset of the many types of debts that can be discharged. A lot of the rules involving dischargeable debts are directly related to the state where the bankruptcy is filed. The best thing to do is to find an expert in how bankruptcy works in your state to determine which of your debts are dischargeable. A general guideline, however, is that if the debt is not an income tax debt, it doesn't involve child or spousal support, or the debt is not a secured debt such as a home or an automobile, the the debt is probably dischargeable.
