Breaking Down Dischargeable and Non-Dischargeable Debt in Bankruptcy

December 23, 2011 (Press-News.org) Breaking Down Dischargeable and Non-Dischargeable Debt in Bankruptcy

American families have dealt with tough economic times during the past five to six years. As finances have tightened and struggles have increased, more and more people have turned to bankruptcy to reduce their debt and get pointed towards the path of financial security. In fact, from October 2010 through September 2011, over 1.4 million individuals determined bankruptcy would improve their situation.

Why You Should Consider Bankruptcy

It is important to remember that even some of the smartest minds and most prominent celebrities have encountered financial problems. Sometimes a business decision goes bad, sometimes an investment has a negative return, and sometimes unforeseen medical expenses drain a family's finances. As a result, bankruptcy was designed to forgive certain debt and recognizes that many unanticipated expenses unfairly punish people year after year.

Bankruptcy Discharge

People cannot remain contributing members of society when they are saddled by mountains of debt. Legislators realized this and determined that certain debts must be forgiven in order for individuals and families to return to a normal life. For example, debts that may be discharged during bankruptcy include, among others:
-Certain judgments against an individual (including negligence claims)
-Personal loans
-Certain business debts
-Credit card debt
-Medical expenses


At the conclusion of a bankruptcy, each creditor who had a claim will be sent an order of discharge. This order informs the creditor that its previous claim no longer exists, and contempt charges could be issued should they violate the discharge order. It de facto eliminates the debt.

There are several types of debt that survive bankruptcy cases. Non-dischargeable debts include:
-Student loans
-Most tax debts or tax liens
-Claims based on willful or malicious injury
-Alimony and child support payments
-Debts involving fraud, embezzlement, larceny, false pretenses or false representation
-Secured claims, such as home loans and car loans

Each bankruptcy case is different, and each presents its own unique challenges. It is important for each debtor to enter his or her bankruptcy case well organized, as well as aware of his or her rights and responsibilities. To better prepare, anyone considering filing for bankruptcy should consider speaking with a qualified bankruptcy lawyer to discuss his or her eligibility, options and what debts might be discharged.

Article provided by The Law Offices of Michael H. Raichelson
Visit us at http://www.cabkattorney.com