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Can I Discharge All of My Debts By Filing for Bankruptcy?

On Behalf of | Oct 29, 2020 | Bankruptcy

When facing suffocating amounts of debt, filing for bankruptcy may be one of the best options for getting a clean slate and moving forward with one’s financial future. But, contrary to popular belief, bankruptcy cannot be used to discharge all debts and may not be appropriate for a person depending on the types of debts that they carry. If you are thinking about filing for bankruptcy, it’s worth your time to meet with a skilled bankruptcy attorney. At the office of the Telpner Peterson Law Firm, LLP, our bankruptcy lawyers can answer all of your questions about what debts can and cannot be discharged in a bankruptcy filing.

What Types of Debts Can I Discharge in a Bankruptcy Filing?

There is a misconception that by filing for bankruptcy, all of your debts will go away. However, this is not true, both because there are multiple types of bankruptcy filings–each with different rules regarding the discharge of debt–and because certain types of debts aren’t dischargeable.

For example, in a Chapter 7 bankruptcy, a debtor’s non-exempt assets will be liquidated and used to pay off a portion of debt; then, remaining eligible debts will be discharged. In a Chapter 13 bankruptcy filing, on the other hand, a debtor enters a plan to repay a portion of their debts over a three-to-five-year period, which means that these debts are not discharged until after the repayment plan has been completed.

What’s more, only certain types of debts can be discharged. Types of debts that are typically not discharged in either a Chapter 7 or a Chapter 13 bankruptcy filing include:

  • Alimony payments;
  • Child support;
  • Certain taxes, such as trust fund debts;
  • Student loans (unless you can prove undue hardship);
  • Debts incurred as a result of willful or malicious injury to another person or property.

Types of debts that are dischargeable in a bankruptcy filing include credit card bills, medical debt, personal loans, utility bills, business debts, collection agency accounts, and auto accident claim debt (in most cases). If you have questions about whether or not a certain type of debt is dischargeable, consult with our bankruptcy attorney.

How Bankruptcy Helps

Even though bankruptcy cannot be used to discharge all of a person’s debts, it does have some important benefits for a debtor who has exhausted other debt-relief options, such as refinancing a loan/mortgage or debt consolidation. These include:

  • Wiping out certain debts so that you have the financial freedom to start over with a clean slate;
  • Initiating the automatic hold, which immediately prohibits creditors from continuing to collect on debt from the moment that you file for bankruptcy; and
  • Allowing you to keep your property in some cases, including your home. Keeping your property is more common in a Chapter 13 bankruptcy when you enter a repayment plan.

Of course, there are some disadvantages to filing for bankruptcy, too, so before you do you should consult with a lawyer.

Call the Office of the Telpner Peterson Law Firm, LLP Today

If you have questions about the bankruptcy process, the advantages and drawbacks of bankruptcy, how to file for bankruptcy, or what types of debts can be discharged in a bankruptcy case, we can help. Our experienced Iowa bankruptcy attorneys know that a lot is on the line when you’re drowning in debt. For competent legal representation you can count on, please reach out to our law office directly or send us a message requesting more information. We can start working on your case immediately.