The goal of most bankruptcies to is obtain a discharge. The bankruptcy discharge eliminates your legal obligation to pay any debt that has been discharged. Simply put, you will not owe these people, companies, banks, etc. any money for qualifying debts that arose before the bankruptcy.
A Bankruptcy Discharge Stops Harassing Creditors
The discharge prevents creditors from:
- Continued harassment to collect debts (i.e., calling, emailing, letters, etc.)
- Continuing with lawsuits to collect debts
- Attaching your wages or other property
Creditors who continue to attempt to collect a debt are violation of the Bankruptcy Court’s Order of Discharge. These creditors can be ordered to pay damages to you, including attorney’s fees and costs. It is important to document any contact by a creditor or payments withdrawn by the creditor after you receive your bankruptcy discharge. If this does happen, your bankruptcy attorney can act on your behalf. You should notify us immediately, if you believe that a creditor continues to attempt to collect the debt.
What’s Not Discharged?
Unfortunately, like so many things in life a bankruptcy discharge is not perfect. There are exceptions. For some people not every debt they have can be discharged in bankruptcy. Below is a list of some of the more common debts that usually cannot be discharged:
- Some taxes
- Income taxes which are older than 3 years can be discharged, if the tax returns were filed on time (or under an approved extension) and the tax return was filed more than 2 years before filing for bankruptcy
- Excise taxes which are older than 3 years can be discharged
- Domestic support obligations (i.e., alimony, child support, most property divisions)
- Debts incurred to pay a non-dischargeable debt. For example you can’t use your credit card to pay your child support and expect to have that debt discharged in bankruptcy
- Student Loans. There is an exception, if the student loan causes an “undue hardship.” However, this has been such a difficult hurdle to overcome, that in most circumstances, student loans are not dischargeable
- Criminal fines, penalties, forfeitures or restitution
- Debts for personal injuries or death caused while operating a vehicle (includes boats & planes) while intoxicated
- Debts not properly listed in your bankruptcy petition. It is very important to make sure your bankruptcy attorney knows about all your debts
- Debts owed to certain pension and retirement plans
- Debts that have been “reaffirmed” during the bankruptcy. Some creditors (usually your car loan) will ask you to sign papers taking this debt outside of the bankruptcy. Your attorney will discuss whether it is in your best interest to reaffirm a specific debt
- Debts that you obtained by fraud
- These are usually for debts that the creditor claims you never intended to pay (i.e., you went on a bender and pull cash advances and then tried to file bankruptcy a short time later)
- Debts you accumulated over time and now realize that you can no longer afford to pay would usually not be considered a debt obtained by fraud.