Types of Dischargeable Debt

When considering the types of debt that you have, you will need to choose whether to file a Chapter 7 bankruptcy, Chapter 11 bankruptcy, or Chapter 13 bankruptcy. Dischargeable debt is the type of debt that can be eliminated completely, or “forgiven.” This includes debts for assets such as houses, cars, and other items, as well as debts for credit cards and other types of unsecured loans. An experienced bankruptcy law firm can help you understand the differences between dischargeable debt and other types of debt.

Most debts can be discharged in bankruptcy, but there are exceptions. Debts such as child support, spousal support, student loans and tax debts generally cannot be discharged, that is, they cannot be eliminated, by bankruptcy filing of any chapter. But those debts can be restructured and repaid over time.

Bankruptcy petitions are filed in federal courts, not state courts, since the federal government has exclusive jurisdiction over cases involving bankruptcy. The Arizona bankruptcy court is a part of the federal judicial system. As such, it cannot discharge or eliminate certain debts like child or spousal support, student loans without a showing of undue hardship and most tax obligations.

However, the Chapter 13 bankruptcy process may allow for restructuring these types of overdue debt into a payment plan when filing for bankruptcy. Chapter 13 bankruptcy does not necessarily eliminate these debts, but it does provide a way to get caught up and to repay the debts in full with a payment plan that stretches over 3-5 years.

Finding out which of your debts are dischargeable debts can help you determine which chapter of bankruptcy to file. With all types of bankruptcy filings, the bankruptcy protection of the automatic stay will stop any harassment or garnishment and will provide time to restructure the debt and complete a repayment plan.