When you are burdened by a significant amount of debt, you may be considering your legal options. Bankruptcy may seem like an intimidating prospect. But bankruptcy declarations have a far worse reputation than they need to. Declaring bankruptcy could be a great way for you to regain control of your life and your financial future.
But that does not mean that all of your debts are going to go away. In fact, there are very specific debts that may or may not be discharged depending on the circumstances of your case. Find out more about what you expect from your bankruptcy filing when you schedule a consultation with a dedicated Alabama bankruptcy attorney at Padgett & Robertson. Call us at (251) 342-0264 to get started on your case.
Chapter 7 Vs. Chapter 13 Bankruptcy in Alabama
The different debts that can be discharged can vary considerably depending on which type of bankruptcy you file. There are multiple different types of bankruptcy declarations. But two of the most common for consumers are Chapter 7 and Chapter 13. Of the two, Chapter 7 bankruptcy is the most frequently used type of bankruptcy.
With Chapter 7, you are effectively liquidating all of your assets in order to repay your debts. For this reason, it is often thought of as a “straight” bankruptcy. However, not everyone qualifies for Chapter 7. In fact, in order to qualify for Chapter 7 bankruptcy, you will need to meet very strict financial limitations, known as a “means test”.
For that reason, some people wind up filing for Chapter 13 bankruptcy. With Chapter 13, instead of liquidating your assets to repay your debts, you can formulate repayment plans that allow you to retain your assets while still paying back your creditors.
Non-Dischargeable Debts in Chapter 7 Bankruptcy Declarations
When you are declaring Chapter 7 bankruptcy, there are certain types of debts that can be discharged and others that cannot be discharged. In the vast majority of circumstances, the following debts are non-dischargeable when you file for Chapter 7 bankruptcy:
- Alimony or spousal support
- Child support
- Divorce debts
- Certain tax debts
- Specific housing debts (including condo fees)
- Federal student loans
- Certain court and attorney’s fees
- Government fines and fees
- Personal injury settlements
- DUI restitution
In the event that you accidentally forget to include a specific debt, you run the risk of not having that particular debt discharged in your bankruptcy petition. However, you may be able to correct the filing if it is done before the deadline. Otherwise, you can expect that any debts that you fail to include in your bankruptcy petition, also known as unscheduled debts, will not be discharged upon the completion of your bankruptcy.
Non-Dischargeable Chapter 7 Debts That Could Go Away with Chapter 13 Bankruptcy
Although the previously mentioned types of debts are non-dischargeable when filing Chapter 7 bankruptcy, if you are declaring Chapter 13 bankruptcy some of these debts could be discharged, such as:
- Debts related to your divorce (not including alimony)
- Certain tax debts
- Civil property damage lawsuits
- Housing debts such as homeowner’s’ association fees
- Certain government penalties and fees
- Prior non-dischargeable debts from a previous bankruptcy declaration
- Retirement plan loan debts
These are just a few of the types of debts that are typically non-dischargeable. But with the right representation and the right type of bankruptcy declaration, you may be able to clear your slate of some of these types of traditionally non-dischargeable debts. Get the guidance and clarity you need when you contact a bankruptcy attorney in Alabama for help.
Meet With an Experienced Alabama Bankruptcy Attorney
Understanding which debts may be discharged and which are non-dischargeable can be confusing depending on the details of your case and the type of bankruptcy you are filing. When you have questions about what debts will and will not be discharged in your case, reach out to an experienced Alabama bankruptcy attorney at Padgett & Robertson.
When you are ready to schedule your no-risk case review, give our office a call at (251) 342-0264 or fill out our quick contact form, and we will be in touch to learn more about the details of your case.