Bankruptcy and Bill Discharge

Filing for bankruptcy gives an honest individual a chance for a fresh financial start by discharging certain of that individual’s debt. Although the individual may have spent beyond his or her ability to pay back what is owed, bankruptcy law does now allow the discharge of certain types of debt.

Included in the group of non-dischargeable debt are things like student loans, court-ordered support for a spouse and/or children, taxes, and penalties and fines resulting from criminal action including driving while intoxicated. Debt that is the result of malicious or willful wrongdoing will not be discharged and neither will non-discharged debt carried over from a previous bankruptcy filing.

A bankruptcy court proceeding will discharge an individual’s secured debt. If that debt is secured by property, it is likely that the creditor will execute its legal right to seize the property. The exception is cases in which the individual’s equity interest associated with the property is exempt. In those situations, an agreement called reaffirmation of debt or redemption allows a debtor to keep the property.

Disclaimer: The general information presented here relates to Chapter 7 consumer bankruptcy. This discussion is incomplete and does not involve consumer debt restructuring as defined under Chapter 13 bankruptcy; a different type of bankruptcy filing. The information presented is not meant as a legal opinion and should not be used as a substitute for legal advice. For detailed information regarding Chapter 7 consumer bankruptcy, refer to your state’s bankruptcy laws. For specific and complete information regarding how state bankruptcy laws affect your personal situation, it is advisable to seek independent legal representation.