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What Type of Debts Can I Get Rid of in Bankruptcy?
The first thing you may want to know when considering bankruptcy is if the debt you have can be discharged. Some debt, such as child support or student loans (in most cases) can not be discharged. Luckily for consumers, some of the more common debts such as credit card debt and medical bills are normally dischargeable in bankruptcy. The most common debts that are discharged in bankruptcy are:
- Credit card debt: In most cases credit card debt can be discharged in bankruptcy with the exception of a few cases where fraud is suspected or luxury items were bought right before bankruptcy filing.
- Medical Debt: People often have no insurance or inadequate medical insurance. Bankruptcy provides a way out for these people and millions of dollars in medical debt is discharged each year.
- A Judgment from a Lawsuit: Judgments can be discharged in bankruptcy no matter what the circumstances are that led to the judgment, with a few exceptions. A judgment may not be discharged if the judgment was based on fraud or a malicious action on the part of the debtor, or judgments resulting from DUI’s. If a lien was put on your house from a court judgment you still may be able to get rid of it if it interferes with your homestead exemption.
- Leases: When you lease something you sign an agreement with the creditor taking responsibility for the debt owed on the property. You also agree that if you don’t make your payments on the property the creditor can take it back. If you wish to give up the property you can file a chapter 7 in which the property will be repossessed but in most cases the debt you owe will be forgiven. A chapter 13 will give you a chance to keep your property by catching up on your arrears through a three to five year payment plan. To do this you will have to be able to afford to pay your arrearages through your chapter 13 plan payment and stay current on your payment for the property.
- Contracts: Your obligations to perform under a contract may be forgiven. For example, if you entered in to a contract to someday buy a business but circumstances changed, forcing you to breach the contract. Breach of contract is dischargeable in bankruptcy.
- Personal Loans: A loan you took out, even if it was an oral agreement, is almost always dischargeable in bankruptcy. Payday loans are a common example.
- Tax Debt and Liens: Tax debt that is more than three years old can be discharged in bankruptcy, under some circumstances. If you are behind on your taxes often times tax liens are placed on your home and personal property. It is possible to avoid these liens in a chapter 13 bankruptcy through a process referred to as “lien stripping.”
There are many other debts that can be discharged in bankruptcy from parking tickets to toll charges. The debts above are some of the more common debts people have.
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We give free consultations to people who live in the San Francisco Bay Area. If you have overwhelming debt that you are not sure you will ever be able to pay off contact us at 510-255-4646 and talk to an attorney today for free!
The Law Offices of Melanie Tavare is a debt relief agency. We help people file for bankruptcy under the bankruptcy code.
"Melanie is the best she very responsive and helpful throughout the process everything was taken care of smoothly. If you are thinking of going through bankruptcy she is the best attorney for you. I will forever be grateful having the chance to work with her. She is very honest too."
"I can't thank Melanie enough for helping me through a challenging process and doing so with incredible knowledge, professionalism and tenacity! She went to great lengths to keep me informed, she responded quickly to my questions, and communicated in terms that I could understand. I highly recommend getting in touch with Melanie should you have the need."
"Choosing to work with Atty. Melanie has been one of the best decisions I've ever made. She was a very patient professional to work with and attentive while providing valuable solutions to all of my concerns. If you are searching for of an Attorney who is knowledgeable, transparent, and diligent - well that's Atty. Melanie."
"What I liked about working with Melanie was how prompt and easy to work with she was. She made the process clear and understandable with as little stress as possible. I would work with her again and recommend her to others."