Which debts discharged in bankruptcy?

Justin HarelikDear Bankruptcy Adviser,
I have debts in the form of credit cards, material to suppliers, a car accident (I was not insured and it was my fault) and a truck repo. Most of these creditors have judgments against me. I am so far underwater I cannot possibly pay all of these debts. Can filing bankruptcy wipe out these debts? Thank you for your advice.
-- Robert

Dear Robert,
Most of the debts you mentioned can be discharged in bankruptcy. Let's go through each type, plus other typical debts that people seek to eliminate. An experienced bankruptcy attorney could discuss other debts you may seek to eliminate.

Debts that can usually be discharged in bankruptcy

  • Credit cards or unsecured loans.
  • Car repossessions and deficiency balances.
  • Some car accidents.
  • Material supplier debts.
  • Medical bills.
  • Lawsuits and judgments.
  • Evictions and unpaid rent.
  • Unpaid utility bills.
  • Foreclosure balances.

Credit card or unsecured loans: This is the most common type of debt eliminated in bankruptcy. Examples: department store cards, personal loans from a credit union, banks or other financial institutions, payday loans and gas cards.

Exception: Excessive credit card use in the months before filing your case may be tricky. The creditor may object to your request to eliminate the entire balance, claiming you never intended to pay for those items. I have seen clients take high-priced vacations or purchase expensive merchandise before filing bankruptcy, only to pay for the excessive use or the expensive merchandise after the filing.

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