Is all bankruptcy debt dischargeable?

On Behalf of | Aug 17, 2021 | Bankruptcy |

Persons suffering from financial stress might think there’s no way out. Federal law begs to disagree, as California residents could turn to the bankruptcy courts for assistance. One way bankruptcy assists filers involves the court’s ability to discharge certain debts. Once discharged, the debtor no longer faces any requirements to pay the creditor provided the debtor does not violate the bankruptcy agreement. While debtors may realize they must follow the law, they might not realize the law prevents specific debts from being discharged.

Discharging debts in bankruptcy

Unsecured debt often ends up being discharged during bankruptcy. Credit cards, personal loans, and other accounts not involving collateral fall under the unsecured category. Some borrowing involves collateral, such as a secured bank loan or a mortgage.

Those continuing to make payments on auto loans or mortgages will usually keep their property. Freedom from unsecured debt balances could make keeping up with current payments. However, there may be other troubling debts that don’t go away.

Debts not available for discharges

Bankruptcy protections can’t take many tax debts away, although some older tax debt is dischargeable. Alimony and child support payments go untouched, although there are ways to modify them in family court. Debts incurred due to DUI-related wrongful death jury awards are not dischargeable.

Mistakes and deception may prove costly. Any debt not listed during the bankruptcy proceedings cannot be discharged. How could the bankruptcy court discharge a debt it doesn’t know about?

Some debts come with question marks about whether the court is capable of discharging them. Students loans and federal income tax debt often prove highly challenging to discharge. The possibility may exist, though.