Will my debt be discharged by a bankruptcy?

On Behalf of | Mar 13, 2023 | Bankruptcy, Chapter 7 |

One issue plaguing many Florida residents is credit card debt. As credit card debt racks up, it can be hard to see a future in which you are debt free again. Many may believe their only path forward is to declare bankruptcy. However, before you make that serious decision, it’s best to become better educated on the entire process.

Debt that can be discharged by Chapter 7 bankruptcy

If you are allowed by the court to enter a Chapter 7 bankruptcy, certain kinds of debt will probably be discharged. This could include:

  • business debt
  • credit card debt
  • medical bills
  • personal loans
  • utility bills
  • other kinds of unsecured debt

Unfortunately, certain kinds of debt will not be discharged. This includes:

  • alimony
  • child support
  • criminal court fees
  • mortgages
  • student loans
  • some tax debt

You may have to enter Chapter 13 bankruptcy instead

Another complication you may be faced with when filing for bankruptcy is that you may end up being forced to move through a Chapter 13 process instead of Chapter 7. Chapter 13 bankruptcy involves a reorganization of your debt instead of an immediate discharge of it. You would then continue attempting to pay off that reorganized debt for three or five years.

The results of an income means test will determine whether you are allowed to move through a Chapter 7 or Chapter 13 bankruptcy. If you make too much money to qualify for Chapter 7, you will be forced to use the Chapter 13 process instead.

Overall, while bankruptcy will discharge many kinds of debt, it will not discharge it all. If you have too much income, you may be forced by the court to continue paying off your debt in a reorganized manner. Keep this in mind and do your research before you try to file for bankruptcy.