Top Kinds of Debt That Can Be Discharged in a Consumer Bankruptcy Case

Struggling with debt can be stressful and anxiety-inducing, and in some cases the stress can even result in physical consequences. If you are in a difficult financial situation, you may be considering the possibility of filing for consumer bankruptcy. Generally speaking, under the U.S. Bankruptcy Code, consumers can be eligible to file for a liquidation bankruptcy (Chapter 7 bankruptcy) or a reorganization bankruptcy (usually Chapter 13 bankruptcy, but sometimes Chapter 11 in certain circumstances). Eligibility for different types of bankruptcy is something that you should discuss with an experienced bankruptcy attorney, given your particular financial circumstances. However, you should know that both kinds of bankruptcy cases allow for the discharge of various types of debts.

A discharge means that you will no longer be liable for the debt, and creditors or debt collectors cannot take action, or even attempt to take action, to collect on debts that have been discharged. To be sure, you cannot face a lawsuit related to collection efforts on discharged debts, you cannot accrue fees or fines on discharged debts, and creditors and debt collectors cannot contact you and tell you that you are required to pay. What types of debts are dischargeable? There are many kinds of dischargeable debt, and specifics should always be discussed with an attorney. In the meantime, the following are some of the most common kinds of debt that can be discharged in personal bankruptcy cases.

Medical Debt

According to the Kaiser Family Foundation (KFF), approximately 10%, or 1 out of every 10, adults in the U.S. owes medical debt, or about 23 million people. About half of those debtors owe more than $2,000 in medical debt, and around 3 million people owe more than $10,000 in medical debt. The good news is that medical debt is almost always dischargeable in bankruptcy cases.

Credit Card Debt

Did you know that, according to Bankrate, about 35% of Americans owe credit card debt? Credit card is one of the top types of debt that is often dischargeable in a bankruptcy case.

Student Loan Debt

While student loans have a notorious reputation as being very difficult to discharge in consumer bankruptcy cases, you should know that new guidance from the U.S. Department of Justice (DOJ) has resulted in a change to the process of having student loans discharged in individual bankruptcy cases. You will need to meet the same “undue hardship” requirement that existed prior to the guidance being issued, but the process for showing that you meet that requirement is now much more streamlined and should make the discharge of student loans much easier for many debtors.

Contact an Oak Park Bankruptcy Lawyer

Are you struggling to pay debts you owe, and are you in a situation where you do not see a path forward for paying off your debts in the future? Filing for personal bankruptcy can allow you to reorganize your debts (in a Chapter 13 bankruptcy case) or get a much sooner fresh start financially (in a Chapter 7 bankruptcy case), and both types of bankruptcy allow for the discharge of various types of debts. Whether you are having problems with credit card debt or medical debt, or you want to consider a bankruptcy case given the new guidance for discharging student loans in bankruptcy, one of our experienced Oak Park bankruptcy attorneys can assist you. Contact the Emerson Law Firm today to learn more about the services we provide to consumers in Illinois.



See Related Blog Posts:

Who Should Be Thinking About Bankruptcy?

Can I File for Bankruptcy With My Spouse?

Comments

Post a Comment

Popular posts from this blog

New Information on Debts That Bankruptcy Cannot Discharge

If you are thinking about filing for bankruptcy in the Oak Park area, it is important to know that certain kinds of debts cannot be discharged in a bankruptcy case. Under U.S. bankruptcy law, these are known as non-dischargeable debts, or exceptions to discharge. There are certain types of debts that have long been identified clearly as non-dischargeable debts, while there are misconceptions about other types of debts that may or may not be dischargeable. As an article in CNBC discusses, the U.S. Supreme Court recently issued a ruling in the case of Bartenwerfer v. Buckley , which clarifies that debts incurred due to another party’s fraud cannot be discharged in an individual’s bankruptcy case. Our Oak Park bankruptcy attorneys can explain the Court’s recent ruling and provide you with additional information on dischargeable and non-dischargeable debts. Supreme Court Says Debt Incurred Due to Another’s Fraud is Non-Dischargeable The recent Bartenwerfer case involved a debtor attempti
Read more

Younger Parents Need an Estate Plan

It is critical for younger parents to have an estate plan, even if they know they are healthy and do not anticipate that anything will happen in the near future. Much too often, younger parents assume that they can wait until they are older to consider estate planning or until there is a health-related reason to begin the estate planning process. Yet estate planning is critically important for parents who have minor children. While estate planning is important for adults of all ages, it can allow parents to make important decisions about who will care for their children in the event that they become unable to do so themselves. Our Oak Park estate planning lawyers can explain in more detail. Naming a Guardian for Your Minor Children in Your Will Most importantly for younger parents, making a will allows you to name a guardian who can care for your child in the event of your unexpected death. Nobody anticipates a deadly accident or a sudden situation in which there is a need for another
Read more

Learning About Different Types of Wills

Whether you are young or old, single or married, wealthy or with limited financial means, healthy or dealing with a medical condition, it is important to make a will. Many people have incorrectly heard that wills are only necessary for particular people, such as those with a substantial amount of assets or for older adults in poor health. Yet wills are critical for adults of all ages, and an experienced Oak Park estate planning lawyer can help you to make one. Before you begin working with a lawyer on a will, you might start conducting your own research into wills in Illinois and the requirements for a valid will. In so doing, you are likely to come across information about many different types of wills, and you are probably going to wonder whether you will need more than one kind of will. In short, there are different terms that can be used to describe the form or function of a will, as well as some distinct types of wills. Our Oak Park estate planning attorneys can explain in more
Read more