When you file for bankruptcy, your ultimate goal is to usually get a bankruptcy discharge. The bankruptcy discharge is a court order that absolves your legal obligation to pay on certain debts. The bankruptcy discharge is a final order that completely stops creditors from trying to collect on debts that have been discharged. Your creditors will no longer be allowed to communicate with you in any way concerning a discharged debt. That means no phone calls, letters, or any other communication attempting to collect on a discharged debt. Once you get a bankruptcy discharge it’s like the discharged debts never existed.
However, there are some exceptions and not every debt is dischargeable. Therefore it is important that you understand the difference between dischargeable and non-dischargeable debts so you can know what to expect when you file for bankruptcy. Bankruptcy law recognizes that certain debts are important, and they must be repaid. Common examples of debts that are generally not dischargeable include:
• Spousal Support (Alimony)
• Child support
• Most student loans
• Criminal penalties and restitution
• Fraudulent debts
• Varying tax obligations (if you use a credit card to pay a nondischargeable debt this is nondischargeable as well)
There are other types of debt that are nondischargeable, but the above list are the most common ones.
Also, bankruptcy will only discharge debts that occur prior to filing. Pre-petition debt is debt you have incurred before your case is filed. This can include everything from credit card debt, medical debt, personal and signature loans, and even repossession or foreclosure deficiencies.
Conversely, post-petition debt is all debt that you incur after your bankruptcy case is filed. These debts cannot be discharged and you are still liable on this debt and must pay for it.
Bankruptcy is a powerful financial and legal tool, but navigating through the law and all its complications and exceptions can be confusing. You need a good lawyer who will take the time to get to know you and your financial situation and apply the law accordingly. If you are thinking about bankruptcy you need the counsel of a good bankruptcy lawyer who will guide you through the process.