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When you complete the bankruptcy process, you have the opportunity to discharge a number of your debts. However, there are types of debts that cannot be discharged even when you successfully complete this process.
Understanding dischargeable and non-dischargeable debt in Dearborn is crucial for anyone planning on filing for bankruptcy. Our skilled attorneys can answer your questions about the differences between the two.
A bankruptcy discharge is a court order that legally eliminates a debtor’s personal liability for certain debts. In a Chapter 7 case, the discharge is typically granted within a few months of filing and follows completion of the entire process. Once a debt is discharged, the creditor can no longer attempt to collect it through any means, including lawsuits or garnishments.
This discharge provides a fresh financial start by wiping out qualifying debts, such as credit card balances, medical bills, and personal loans. It is one of the most powerful benefits of filing for bankruptcy. However, it only applies to debts that are legally dischargeable under the U.S. Bankruptcy Code. Some debts, like recent taxes or student loans, are usually excluded. Understanding the difference between dischargeable and non-dischargeable debt is critical for anyone filing bankruptcy in Dearborn.
For many people in Dearborn who file for bankruptcy, most of their debts will be dischargeable. Some of the most common obligations that lead to overwhelming debt, including credit card balances, can be discharged through the bankruptcy process. The only exception is when a credit card is secured by collateral, which is uncommon.
Most loans are ultimately dischargeable as well. If you borrow from a private lender, including a bank, you will likely be able to discharge the full amount owed. In fact, you can typically discharge loans that are secured by collateral as well. For example, you could discharge the full remaining loan balance for your car. The downside is that, along the way, your lender may repossess the vehicle.
Most of your outstanding bills are likely dischargeable as well, including utilities like electricity and water. The same is true for medical debts, which are frequently a major factor in a person filing for bankruptcy. You may even be able to discharge older tax debts in some situations, especially if you have filed your tax returns on time.
There are also certain types of debts that are non-dischargeable in a Dearborn Chapter 7 bankruptcy case. Often, these are obligations imposed by law or a court order. For example, you cannot discharge recent tax obligations. The same is true for court-ordered child support or alimony payments. Even your student loans are likely not dischargeable, as most are government-backed.
It is helpful to remember that bankruptcy might still be the right option for you, even if you have debts that cannot be discharged. You can still gain temporary relief to get your financial affairs in order, and discharging other obligations could make it easier to pay these debts down in the future.
If you have questions about dischargeable and non-dischargeable debt in Dearborn, now is a good time to ask. Our attorneys are here to provide you with answers and guide you through every stage of the process. Reach out today to get started and fill out our online debt calculator.
We have locations available by appointment in the following areas. Please call us to speak to an attorney and set up an initial meeting.
We are a debt relief agency helping people file bankruptcy under the United States Bankruptcy Code.
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