The Difference Between Non-Dischargeable Debts and Dischargeable Debts

Posted by on May 20, 2013 in Financial Issues | 7 comments

One common misconception about bankruptcy that a number of debtors fall for is that filing for bankruptcy will eliminate every single one of their debts. Unfortunately, bankruptcy can only discharge certain types of debts. Every debt is classified as either dischargeable or non-dischargeable, and it is important that you understand the difference before you file for bankruptcy.

While bankruptcy can help eliminate a number of your debts, it cannot get rid of all of them. As the name suggests, dischargeable debts are those that can be eliminated, or discharged, while non-dischargeable debts are ones that cannot be eliminated by Chapter 7 or Chapter 13 bankruptcy.

There is a large difference between dischargeable and non-dischargeable debts, as non-dischargeable ones are those that the debtor will be responsible for paying even after filing for Chapter 7 or Chapter 13 bankruptcy. According to Section 523 of the Bankruptcy Code, some common types of non-dischargeable debts include the following:

  • Debts that aren’t listed when you file for bankruptcy
  • Student loans
  • Child support and alimony
  • Any financial compensation you owe in a personal injury settlement
  • Penalties from traffic tickets or crimes
  • Taxes

While a debtor will still be responsible for paying these debts after a bankruptcy filing, there are other types that they will be able to eliminate. The following are the types of debts you can discharge by filing for Chapter 7 or Chapter 13 bankruptcy:

  • Credit card debt
  • Small claims judgments
  • Medical bills

Although credit card debt is dischargeable, any debt accrued suspiciously close to the bankruptcy filing date or charges considered luxurious may not be discharged. Speaking with a knowledgeable and experienced bankruptcy lawyer can help you determine whether filing for bankruptcy is right for your particularly financial situation due to the limitations placed on discharging debt.




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