If I File for Bankruptcy, Do I Still Need to Pay Off All of My Debts?

 Posted on November 25, 2020 in Bankruptcy

Those who are unfamiliar with the details of bankruptcy, which typically includes anyone who has not filed for bankruptcy, may incorrectly believe that all of your debts disappear upon filing. While bankruptcy is meant to help rid you of significant debt, the process will still require you to pay off most of your debts. The details of this financial breakdown vary depending on the type of bankruptcy that you file as well as the depth of your debts. Many filers do, however, get some form of a break, known as a discharge. Before moving forward with the bankruptcy filing process, it is important to understand what exactly you are responsible for and which of your debts will be forgiven without full repayment.

What Is a Bankruptcy Discharge?

A bankruptcy discharge is a legal term for debt forgiveness. In other words, a discharge releases a debtor from personal liability for a number of specified debts, not requiring him or her to pay back the discharged debts. A discharge is a permanent legal order that restricts the debtor’s creditors from taking action to obtain money for the outstanding debts. A bankruptcy discharge does not, however, cancel out any liens that a creditor may have against a property, meaning that a creditor is still able to enforce a lien and recover the associated property.

Is the Discharge Automatic?

Discovering that some of your debts may be forgiven, without you having to pay them off, is good news to hear. You may be wondering, though, what you need to do to secure this discharge. A bankruptcy discharge is usually automatically received unless there is existing litigation regarding objections to the discharge. All applicable parties—the creditors, the trustee, the trustee’s attorney, the debtor, and the debtor’s attorney—will be sent a notice, which is a copy of the final order of discharge. The notice informs creditors that they can no longer attempt to collect the specified debts.

Which Debts Cannot Be Discharged?

Not all debts can be discharged when filing for bankruptcy. There are 19 categories of debt that are listed as discharge exceptions, meaning that they are unable to be forgiven without payment. The most common types of nondischargeable debts include:

• Certain types of tax claims

• Debts for spousal or child support

• Debts for malicious and willful injuries to a person or property

• Debts to government units for penalties and fines

• Debts for educational loans

• Debts for causing personal injury while driving intoxicated

• Debts for cooperative housing or condominium fees

Contact a Broward County Bankruptcy Attorney

Filing for bankruptcy is hardly a straightforward process. There are a number of contingencies that come along with it, many of which are dependent upon your financial situation and the type of bankruptcy that you file. Attorney Gavin Elliot focuses his practice on bankruptcy law, providing clients with the utmost understanding and guidance through this complex legal area. The Elliot Legal Group understands the weight that filing for bankruptcy can hold over families, which is why we work tirelessly to help you through this difficult time. If you are considering filing for bankruptcy or would like more information about what the process entails, contact our reputable Fort Lauderdale bankruptcy lawyer today at 754-332-2101 to schedule a private consultation.

Source: https://www.uscourts.gov/services-forms/bankruptcy/bankruptcy-basics/discharge-bankruptcy-bankruptcy-basics