Debt that a Bankruptcy will not Erase

Times of financial crisis may cause a person to consider bankruptcy as means to get there financial burden lifted off his or her shoulders.  Bankruptcy comes in three varieties Chapter 7, Chapter 11 and Chapter 13; however, it still is a difficult choice to make when there is little is known about either type.  Filing for bankruptcy is an option that strike fear into many, because most people feels bankruptcy is almost like a foreign language not easily understood.   Many should be aware of what type of debt can and cannot be eliminated by any type of bankruptcy.   By understanding what debt cannot be eliminated, a person can clearly know if bankruptcy is a viable option for his or her financial crisis.

Debts that are eliminated by any bankruptcy are called dischargeable debt.  Chapter 7 will discharge debts such as credit card debt, judgments, medical bills, and leases. It will also eliminate personal loans.  Chapter 11 discharges similar debts as Chapter 7.  Chapter 13 will also eliminate most of the debts covered by other Chapters mentioned earlier; however it will eliminate any debt that come from divorce proceedings.  Bankruptcy is clearly the right move to make if the debt a person is trying to eliminate can be categorized as a dischargeable debt.

The various Chapters of bankruptcy will not eliminate student loans, child support, and any restitution made by the courts. As mentioned in the previous sentence, the debts will not be eliminated by any type of bankruptcy.  The debts are not an exclusive list of every debt, but it provides an example to a person thinking of filing. Bankruptcy is not an option if he or she is attempting to rid themselves of debt that is not dischargeable.  The Chapters will do a great job in relieving financial burden that occurs when debt accumulates.

By understanding the meaning of dischargeable debt, it is the first step to considering the type of bankruptcy a person should file. It is important to categorized debt before choosing from the various chapters, because some will discharge the debt.  As mentioned earlier, some debt will never be eliminated.  Eliminating debt will provide a fresh start that will lead to a better financial situation.  Chapter 7, 11, and 13 represents the various types of bankruptcy available, but they can only help if a person provides all the debt that he or she wants to discharge because once bankruptcy is filed debts cannot be added. A person will still responsible for pay the debt in full. A person can clearly understands what debt that cannot be erased by the use of bankruptcy.