It’s a simple question. However, the answers are sometimes complex. My friends joke with me because when they ask me a “legal” question that appears on the surface seems “simple,” my response typically starts of with “Well…that depends….”
When it comes to bankruptcy, the answer to the question of what debts are discharged in the process starts off with “Well…that depends…..”
The goal of bankruptcy is to wipe out most of your debt, or at least enough of your debt to give you a chance to start over. Not all debts are equal, however, and depending on what type of bankruptcy you file, your behavior in the 6 to 12 months leading up to your bankruptcy filing, and whether or not your creditors challenge your discharge.
So, you take a situation where a debt would normally be discharged…for example a credit card debt. Most of the time, credit card debt is discharged in bankruptcy. However, if you charged more than $550 on that card within 90 days of filing bankruptcy, then the creditor may claim that you committed “fraud” in the bankruptcy contest and that the debt should not be discharged by the Court.
So even the answer to the seemingly simple question “Is credit card debt discharged in bankruptcy?” The answers starts of with “Well….that depends….”
Some debts are not up for debate: Alimony, child support, criminal penalties, judgments related to DUI, and some kinds of taxes will never be discharged under bankruptcy.
In rare situations, student loans can be discharged. This is accomplished through a special process in Bankruptcy Court called Complaint to Determine Dischargeability.
Debt you racked up immediately prior to filing bankruptcy could be considered fraud or credit card misuse, so those debts would be at risk for being denied.
In most cases, filing bankruptcy in the correct time frame, for debts not related to support, taxes or criminal judgments will most likely result in a successful discharge.
The best thing to do is meet with a bankruptcy attorney for free, explain your situation, disclose what has been going on in your financial life and find out your options before you do anything else. We can help you. But, you have to show up and be honest first.
Over the past 23 years, the Law Offices of Christopher A. Benson has helped over 2,300 of Washington clients take control of their financial situation. We can stop your garnishment and change your monthly payments for all your combined unsecured debt, and if you have had more than $600 garnished within the last 90 days, we can get all of the money back in most cases. But you have to act quickly–call (253) 815-6940 for your free consultation, or email us today. Evening and weekend appointments available.
About the Author
Chris served on the Board of Directors for Habitat for Humanity
Seattle/S. King County for 10 years and served as Vice President
of the organization during part of that time. Read More