Most Consumer Debt is Dischargeable Through Bankruptcy

For many consumers in Oak Park, dealing with “crushing debt,” as a recent article in CNBC describes it, can feel like an insurmountable burden. However, there is good news: Most types of consumer debt are in fact dischargeable through consumer bankruptcy. While there are certain types of debts that can be difficult to discharge by filing for personal bankruptcy, and some debts that simply cannot be discharged, the most common forms of consumer debt can be wiped out through a Chapter 7 bankruptcy filing. We will tell you more about debts that are usually dischargeable, debts that are sometimes dischargeable, and debts that cannot be discharged through consumer bankruptcy.
Common Consumer Debt Often Can be Discharged in Your Chapter 7 Bankruptcy
What types of consumer debt are among the most common? As the article explains, some of the most common forms of consumer debt include the following:
  • Credit card debt;
  • Medical debt; and
  • Student loan debt.
In almost all Chapter 7 bankruptcy filings, credit card debt or medical debt make up a significant portion of the debt that the filer is seeking to have discharged. Both types of debt are forms of unsecured debt that are usually discharged pretty easily in a Chapter 7 case. Student loan debt is a bit different.
Difficult but Not Impossible Forms of Debt to Discharge in a Personal Bankruptcy Case
Student loan debt is often discussed as one of the most challenging—but not impossible—to discharge in a bankruptcy case. In order to get student loan debt discharged, a debtor must prove in most circumstances that continuing to pay the student loan debt would constitute an undue hardship.
While student loan debt can be tricky to discharge, that fact alone does not mean that you should not try with the help of an experienced Oak Park bankruptcy lawyer.
Debt That Cannot be Discharged through Consumer Bankruptcy
Some debts simply are not eligible for discharge when you file for bankruptcy, including but not limited to:
  • Recent tax debt;
  • Debt owed for spousal maintenance;
  • Debt owed for child support;
  • Debts owed from a personal injury case in which the debtor was found liable for injuries resulting from drunk driving; and
  • Debts owed for criminal restitution.
There are cases in which tax debts can be discharged when you file for Chapter 7 bankruptcy, but nearly all recent tax debt will not be dischargeable. There are no circumstances in which you will be able to have debts for family support (spousal maintenance or child support) discharged.
Bankruptcy May Help Sooner Than You Think
As the CNBC article underscores, many consumers want to avoid bankruptcy if they are able to do so. As such, many people wait until there is a “triggering event” to seek bankruptcy protection, such as a lawsuit filed by a creditor.
However, recognizing your situation and filing sooner—especially if you have significant credit card and medical debt—can help you to get a fresh start sooner and to begin the process of rebuilding your credit.
Contact an Oak Park Bankruptcy Attorney
If you have questions about how consumer bankruptcy may be able to help you, do not hesitate to discuss your case with an experienced Oak Park bankruptcy attorney. Contact the Emerson Law Firm for more information about our services.
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