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Can bankruptcy discharge your outstanding debts?

As someone facing a variety of different types of debt, you may think that each type needs its own method of repayment or discharge. However, rather than taking several small steps in hopes of eventually getting out from under substantial debt, you may want to consider taking one significant step in order to have at least some of your liabilities forgiven. In many cases, filing for bankruptcy can help achieve such a goal.

As you explore your bankruptcy options, you may want to assess the types of debts you have. It may prove important to understand that bankruptcy does not discharge all types of debt, and your decision to move forward with this debt relief method may hinge on how much of your debt could get forgiven.

Dischargeable debts

Most people have a considerable amount of unsecured debt that they hope to reduce or eliminate entirely through bankruptcy. Luckily, various bankruptcy avenues address multiple types of unsecured debt, and if the majority of your debt falls into this category, a successful Chapter 7 or Chapter 13 filing could significantly lessen your financial burden. Types of commonly discharged liabilities include:

  • Credit card debt
  • Medical expenses
  • Personal loans
  • Contract obligations
  • Legally-binding payment notes
  • Debts not specifically categorized as non-dischargeable

Non-dischargeable debts

Because certain debts go unaffected by bankruptcy filings, you may still have some financial obligations to address after you complete your case. The types of liabilities remaining could depend on the type of bankruptcy you file. However, many non-dischargeable debts overlap in both Chapter 7 and Chapter 13 bankruptcy. For instance, these filings do not discharge debts relating to the following:

  • Child support
  • Alimony
  • Monetary obligations from criminal activity
  • Tax obligations
  • Debts not listed in the bankruptcy petition

Most individuals also have an extremely difficult time achieving any success when it comes to discharging student loans through bankruptcy.

Right method for you

The type of bankruptcy filing that most suits your circumstances can depend on a variety of factors, including types of debt, amount of debt and income level. Therefore, you may want to make sure that you understand how filing method is determined and other related information needed to determine whether moving forward with this option could work in your favor.

In order to gain reliable knowledge and advice on your bankruptcy avenues, you may wish to speak with an experienced New Jersey attorney. By reviewing your debts and hopes for your case, you and your legal counsel can determine your best options.

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