Which Debts Are Dischargeable in Bankruptcy?: Info On Credit Cards, Medical, Student Loans, Others
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TAX DEBTS: Many may wonder whether tax debts are dischargeable. Some tax debts may be discharged, depending on whether they were taxes actually owed OR whether they were penalties incurred. For example, a tax penalty owed due to a late filed tax return from 10 years ago MAY possibly be discharged. But a tax debt owed as regular income tax from last year will generally NOT be discharged. An experienced bankruptcy lawyer will be able to provide more information regarding which debts owed to the IRS or other tax organization may or may not be discharged.
CREDIT CARDS: The large majority of debtors CAN discharge credit cards. Most debtors can discharge unsecured, non-priority claims. Most credit cards classify under this category. If filing a chapter 13, this means that you might repay only a fraction of these unsecured creditors. If filing a chapter 7, you might be able to get rid of credit card debts entirely.
MEDICAL DEBTS: Most medical debts can be discharged. Exceptions may sometimes include those owed to a government entity, but only under limited circumstances. For this reason, it's often best to talk with an experienced bankruptcy professional before filing.
STUDENT LOANS: Student loans may be discharged if you face an "undue hardship" under the Brunner test. Basically, the test considers factors such as your ability to repay, the circumstances which led to your ability/inability to pay, and your previous good-faith efforts or lack thereof to pay. Often, student loans will not be discharged, but will paid outside a plan or paid after discharge of other debts. An experienced bankruptcy lawyer can provide more information on discharging student loans.
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