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Chargeable vs. Dischargeable debts: What you need to know

 Posted on January 09, 2022 in Bankruptcy


Contrary to popular belief, filing for Chapter 7 bankruptcy does not mean that all your debts are wiped. The possibility of discharging a debt depends on its nature.

Dischargeable debts are those that you are not legally responsible for after filing for bankruptcy. They include most consumer debt such as medical bills or credit card debt.

Non-dischargeable debts are those you have to continue paying even after declaring bankruptcy. These include child support or alimony, debts that you did not disclose when filing for bankruptcy, student loans, fines, or penalties owed to government entities, among others.

When discharge may be denied

In some cases, a creditor can dispute their debt's status and have it declared non-dischargeable. For instance, if you lied in your bankruptcy application or hid some assets to defraud creditors, the judge may deny discharging you from such debt. Additionally, if you file for bankruptcy too frequently, it may be considered an abuse of the system and lead to a denial of discharge.

The dos and don'ts of declaring bankruptcy debt

You need to be forthcoming with the truth throughout your bankruptcy application process. Failing to disclose any financial information may be viewed in bad faith and prove costly. Additionally, being truthful will help you ascertain your position after everything is said and done regarding where your finances stand.

Knowing the exact amount of outstanding debt against what you currently own will help you plan for the future and arrange a suitable recovery strategy. To do this, you need to be aware of what to expect along the way, especially if you are just getting started on the whole bankruptcy process.

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