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If your debts have become overwhelming, you may be considering bankruptcy as a way to deal with them and get back on the road to financial health. For many people, bankruptcy can discharge the majority of debt and allow them to get back on their feet; however, not all debts can be discharged in bankruptcy. For more information, read on.

What is a discharge?

In bankruptcy, a discharge is a filer’s release from responsibility for certain debts. After arrangements have been made by the bankruptcy trustee to pay as much of the filer’s debt as possible, a discharge is issued. At this point, the filer is no longer responsible for those obligations, and his creditors cannot attempt to collect the amount they were owed. The discharge is usually automatic, unless a creditor objects to it.

What debts can be discharged?

Most debts that are not tied to property, known as unsecured debts, can be discharged. This includes credit card debts, medical bills, utility bills, and other personal debts. Some tax debts can be discharged, if they are more than three years old, but this depends on a filer’s particular situation. If your debt belongs mainly to these categories, bankruptcy might be suitable for you.

What debts are not discharged?

Though many debts can be discharged, some important ones cannot. Student loans, child support, restitution, court fines, recent income taxes, and court judgments must still be paid despite bankruptcy. If the filer wants to keep the property the debt is attached too, secured debts like car loans and home mortgages must also be paid. If not, he or she can choose to have the debt discharged, but the lender will repossess the property. Hence, prospective bankruptcy filers whose debt is mostly of these varieties will need to consult carefully with a lawyer before making their decision to file, in order to make sure it is their best option.

No matter what kind of debt you have, we at Cutler & Associates, Ltd. can help you deal with your financial obligations.


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