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What Can and Cannot Be Discharged In Bankruptcy?

Bankruptcy is a powerful legal tool that can wipe out or greatly reduce consumer debt. Through Chapter 7 or Chapter 13 bankruptcy, a debtor has a chance at a fresh start and can begin rebuilding credit promptly.

Not all debts can be discharged in bankruptcy. It is important to recognize the distinction of which debts are and are not dischargeable. The experienced Ohio bankruptcy attorneys at Fesenmyer Cousino Weinzimmer can help you recognize which debts may be discharged and determine what is the best Chapter for you to file.

In general, the following unsecured debts are dischargeable: credit card debt, personal loans, medical debt and other consumer debts.

  • Secured debts such as home mortgage payments and car loan payments can be included in the discharge, but if you are behind on payments the lien holders will likely repossess or foreclosure on that asset. Therefore, most debtors filing bankruptcy who want to keep their houses and cars incorporate repayment of missed payments into a Chapter 13 bankruptcy repayment plan.
  • The following financial obligations are generally not dischargeable: student loans, back taxes, court fines/fees, and child support arrearages.

There are two major forms of bankruptcy, and you need to consider which is right for you.

In the case of a Chapter 7 bankruptcy, qualifying debts are discharged within a few months, but if debts are considered nondischargeable, you will still be responsible for repaying them after your bankruptcy. Chapter 7 bankruptcy is a good option for people with limited income who can no longer afford to repay their debts such as credit card bills, medical bills, utilities, payday loans or personal loans.

In a Chapter 13 bankruptcy, debts are reorganized and repaid over a three- to five-year period. A Chapter 13 repayment plan allows you to repay nondischargeable debts affordably, without the pressure of debt collection activity such as lawsuits, wage garnishment or creditor harassment. It is important to note that you will need to be able to afford these payments to have a successful Chapter 13. A Chapter 13 bankruptcy is typically utilized to cure arrearage on secured debts. Therefore, if you are behind on a mortgage or vehicle loan that you want to keep then a Chapter 13 bankruptcy might be the best option for you.

Secured debts such as unpaid mortgage arrearages and back car loan payments are prioritized in the Chapter 13 repayment plan. Unsecured debt is paid at a designated percentage and any unpaid amount is typically discharged at the end of the repayment plan.

Furthermore, some debts may be non-dischargeable in bankruptcy if the creditor challenges your request to discharge them. Creditors may challenge dischargability if you incurred the debt fraudulently, you incurred the debt within 90 days of filing for bankruptcy, or the debt was owed under a divorce decree or settlement.

A personalized review of your circumstances with an experienced bankruptcy lawyer is the best way to understand what bankruptcy can and cannot accomplish in your case. Plan now to reclaim control of your financial future. Take advantage of a free initial consultation with a lawyer at Fesenmyer Cousino Weinzimmer at one of our offices in Columbus, Dayton or Cincinnati.
Our Ohio bankruptcy lawyers are prepared to evaluate your financial situation and find the best form of debt relief suitable to your goals and circumstances.
Send an inquiry by email or call 614-228-4435 (Columbus), 937-222-7472 (Dayton), or 877-654-5297 (Cincinnati).

We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.

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