Filing personal bankruptcy may seem frightening, but in many cases it is the best thing you could possibly do for your financial future. It can get you back on your feet and moving towards financial freedom. If you are facing overwhelming debt and considering bankruptcy as a solution, you will want to know which of your debts can be discharged and which ones will stay with you until paid.
Dischargeable Debts in Personal Bankruptcy
When you file for Chapter 7, virtually all of your debts could be eliminated in a matter of months, with a few notable exceptions. Examples of debts that can be discharged in Chapter 7 include:
- Credit card debts
- Medical bills
- Utility bills
- Bad checks (except if fraudulent)
- Deficiency balances after repossession
- Personal loans
- Collection agency accounts
- Judgments in civil lawsuits (except when based on fraud)
- Past due rent and money owed under lease agreements
- Auto accident claims (unless they involve drunk driving)
The U.S. Bankruptcy Code lists 19 different categories of debt that cannot be discharged in personal bankruptcy. Everything that does not fall within those categories is dischargeable. The most noteworthy of those exclusions are alimony, back child support, student loans, fraudulent debts and certain taxes. Those debts generally cannot be discharged in bankruptcy. There are exceptions, and your case should be evaluated on an individual basis.
Reaffirmation Agreements in Personal Bankruptcy
If you file for personal bankruptcy but want to keep certain secured property, such as your home or your car, you may decide to reaffirm those debts. In a reaffirmation agreement, you agree with your creditor that you will remain liable for the debt and pay the money owed, even though that debt would otherwise be discharged in your bankruptcy. In exchange, the creditor agrees not to repossess the property, as long as you continue to make your payments as agreed.
In a reaffirmation, you agree not to file for bankruptcy or otherwise attempt to wipe out the debt for a period of 6 years. The agreement is filed with the court, and you must sign a statement of your income and expenses establishing your ability to make payments.
The decision of whether to reaffirm a debt or let the property go to the creditor is entirely up to you, but you may need advice to sort out these matters. You will need to come up with the past due balance and get an account current before you sign a reaffirmation agreement.
Personal Bankruptcy Lawyer in Pasadena
If you are struggling to stay afloat and sinking nevertheless, it is in your best interests to speak with a personal bankruptcy attorney as soon as possible. Our dedicated legal team at DCDM Law Group has helped countless California consumers to navigate the bankruptcy process with success. We take the time to fully understand your situation, and our goal is to help you achieve the best possible results.
Contact us for a free consultation. We can discuss your debt relief options and help you decide whether filing bankruptcy is the right choice for you, or if another option could better resolve your financial difficulties. Make the call to our Pasadena personal bankruptcy lawyers and start reclaiming your financial future today!