The Difference Between Dischargeable And Nondischargeable Debts In Bankruptcy

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There are two main factors with bankruptcy that determine what happens to the debts you owe. The first factor is the branch you use, and the two main types of Chapter 7 and Chapter 13. The other factor is the type of debt you have, and there are two main categories – dischargeable and nondischargeable. Here are several things to understand about the way differences in how these two categories of debts are handled in Chapter 7 and Chapter 13.

Chapter 7: Dischargeable vs. Nondischargeable Debts

One branch of bankruptcy available for some people to use is Chapter 7. If you can use this branch, you would be able to eliminate any debts you have that fall into the category of "dischargeable" debts. For a debt to be dischargeable, it must meet certain conditions. The main condition is that it must be an unsecured debt. Some of the most popular debts that fall into this category are medical bills and credit card debts. If you have these types of debts, they will most likely be discharged in your case, which means you would not owe them anymore if you filed for bankruptcy.

Debts that are nondischargeable in a Chapter 7 bankruptcy case are considered priority debts, and you would still owe these in full if using this branch. This includes money you owe for alimony, child support, IRS tax debts, and student loans. Chapter 7 does not offer relief from these types of debts.

Chapter 13: Dischargeable vs. Nondischargeable Debts

Dischargeable vs. nondischargeable debts are exactly the same types of debts in Chapter 13 as they are in Chapter 7. The similarity is that you will have to repay all nondischargeable debts in full with Chapter 13 just like with Chapter 7. With dischargeable debts, you may or may not have to pay them in full with this branch.

The benefit of using Chapter 13, though, is that you will receive up to five years to work on repaying your debts. With Chapter 7, you would have to pay any nondischargeable debts in full right away if they are currently due. If you do not, you could end up with fines or penalties, and you could also lose assets you currently own by not paying these debts off.

To learn more about the types of debts you have and the branch you could use for relief, talk to a local lawyer who offers bankruptcy services.

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