It’s a widespread misunderstanding that once you file bankruptcy, all your debts will be discharged and you can start over with a clean slate. However, this is not always the case as you may have debts that cannot be eliminated through bankruptcy. If you’re considering filing for bankruptcy and are unsure of what kind of debt can be erased, it’s in your best interest to connect with our experienced Gillette Bankruptcy Lawyers. Please continue reading as we explore the bankruptcy process and what types of debt can be discharged.
What is Dischargeable Debt?
Bankruptcy offers a legal avenue for individuals overwhelmed by debt to get their finances in order. Through this process, certain types of debt, known as “dischargeable debts,” can be wiped out. This means that the debtor is no longer legally obligated to repay these debts. Unsecured debts, such as medical bills, credit card debt, personal loans, and past-due utility bills can usually be eliminated through a Chapter 7 bankruptcy filing.
It’s important to note that filing for bankruptcy can damage your credit score, making it more difficult to access loans or credit in the future. If you file under Chapter 7, it will typically remain on your credit report for 10 years while Chapter 13 remains for 7. However, the impact it has on your score will lessen over time. You should also keep in mind that if the court discharges a debt through bankruptcy, creditors are prohibited from making collection efforts on that debt. This includes making phone calls, sending letters in the mail, or filing a claim against you for the outstanding amount.
What Debts Cannot Be Eliminated Through Bankruptcy?
Although bankruptcy can help significantly reduce or eliminate many debts, it doesn’t erase all debts. Debts that remain legally binding even after bankruptcy proceedings are finalized are classified as dischargeable debts. Such debts include, but are not limited to:
- Criminal restitution
- Taxes
- Leins
- Alimony
- Child support payments
- Personal injury compensation for victims of negligence
- Any debt incurred by fraudulent activity
- Most student loans
When you file for bankruptcy, you can be held responsible for any exuberant purchases you make within 90 days of filing. For instance, if you spend a large sum of money on luxury goods shortly before filing, you may be liable for the amount spent unless you can prove that you fully intended to pay off the purchase.
Even though bankruptcy cannot discharge all debts, it can still prove advantageous. By eliminating dischargeable debts, you can focus on other financial obligations and improve your overall financial situation. If you’re considering filing for bankruptcy in Wyoming, please don’t hesitate to contact a dedicated lawyer at 307 Bankruptcy, who can help you navigate your legal options. Connect with our firm today to learn more about what we can do for you during these tough times.
