What debts can be discharged in bankruptcy?

Bankruptcy proceedings can help individuals fix their financial situation and work toward a more stable financial future. Through individual bankruptcy, they can claim their bankruptcy and benefit from the process. Although bankruptcy can seem like you are claiming defeat, it can actually be a useful tool to help with your finances. This process provides help along the way. Through bankruptcy, some of your debts may be discharged. Most unsecured debt that you acquire can be discharged. These debts can include personal loans, medical and dental bills, court-ordered judgments, repossession deficiency, claims in an automobile accident or negligence case and motor vehicle commission surcharges. 

Are debts non-dischargeable?

For bankruptcy proceedings, such as Chapter 7 bankruptcy, some debts are dischargeable while others are not. Debts that are non-dischargeable can include spousal and child support, debts incurred by dishonesty, fraud and concealment, amounts received by embezzlement, civil judgments due for intentional or willful torts and recent credit card charges that may include luxury goods, services or cash advances. Other non-dischargeable debts can include recent federal and state income taxes and any tax obligation where you had a fiduciary obligation to collect and remit, such as payroll and sales tax. Most student loans cannot be discharged as well. However, an exception in limited circumstances can be when a bankruptcy judge claims that the debtor would experience undue hardship if the debt were not discharged.

Am I eligible for Chapter 7 bankruptcy?

Before filing for bankruptcy, individuals will have to adhere to the prerequisites that are required. They will have to pass a means test. This test evaluates their income level and if it is sufficient enough to pass the average family income. If it does not, they may be eligible to file for bankruptcy. If it exceeds the average income of Americans, the individual may not be able to qualify for Chapter 7 bankruptcy. Those who wish to file for Chapter 7 bankruptcy must also complete credit counseling from an approved agency to better educate them on their finances. This must be completed within the 180 days prior to filing. For these proceedings, individuals should be prepared to show a full financial disclosure.

Detzky, Hunter & DeFillippo, LLC is an experienced law firm that has proudly served clients across New Jersey for decades from their convenient locations in Freehold and Somerville. If you need strong legal guidance, contact us today to schedule a consultation. We are lawyers who listen, counselors who care.

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