One of the main benefits of filing for bankruptcy is having your debts discharged. Once you have debts discharged through the bankruptcy process (whether under Chapter 7 or Chapter 13 (Debtors Court)), you are no longer responsible for those debts. Your former creditors cannot require you to pay the debts, and those creditors cannot pursue collection activities.
Many individuals (and couples) who file for bankruptcy in Alabama will be able to have all of their debts discharged. However, there are some exceptions to the dischargeability of debts under both Chapter 7 and Chapter 13 (Debtors Court). Therefore, before you decide to file, it is important that you speak with an experienced Alabama bankruptcy lawyer who can explain which debts are eligible for discharge.
Common Debts that Are Eligible for Discharge in Chapter 7 and Chapter 13 (Debtors Court)
Most consumer debts are dischargeable in both Chapter 7 and Chapter 13 (Debtors Court). For example, all of the following debts are generally eligible for discharge:
- Auto loans
- Credit cards
- Medical bills
- Mortgage debt
- Personal loans
- Small business debts
- Unpaid cell phone and utility bills
- Unpaid rent
- Other unpaid bills for consumer products and services
Note that these debts are generally eligible for discharge. There are certain circumstances in which a debt can be deemed non-dischargeable. When you speak with an Alabama bankruptcy lawyer at The Biddle Law Firm, your lawyer can tell you if any of these circumstances apply to your individual case.
Debts That Are Non-Dischargeable in Chapter 7 and Chapter 13 (Debtors Court)
Non-dischargeable debts fall into two categories: (i) debts that are generally non-dischargeable; and (ii) debts that are non-dischargeable due to the circumstances.
Debts that are generally non-dischargeable include:
- Certain tax debts
- Certain criminal penalties
- Child support and spousal support (alimony)
- Certain student loans
Along with debts that are generally non-dischargeable, other debts may be deemed non-dischargeable due to the circumstances under which they were incurred. For example, a debt that would otherwise be eligible for discharge may be deemed non-dischargeable if:
- The debt was incurred through embezzlement or larceny
- The debt was obtained through false pretenses
- The debt was obtained through fraud
- The debt resulted from willful and malicious harm to person or property
- The debt was incurred for luxury items within 90 days of filing for bankruptcy
But, even here, there are exceptions. For example, some of the prohibitions on dischargeability that apply in Chapter 7 do not apply in Chapter 13 (Debtors Court). To ensure that you are making an informed decision about filing for bankruptcy or Debtors Court, you should work with an attorney to review your individual circumstances.
Request a Free Consultation with an Alabama Bankruptcy Lawyer
Do you have questions about filing for bankruptcy or Debtors Court in Alabama? If so, we invite you to call 205-328-3328 or contact us online to schedule a free initial consultation with a lawyer at The Biddle Law Firm.