What Can and Cannot be Discharged During Bankruptcy?

The dischargeability of certain debts depends entirely on which chapter the bankruptcy is filed under. If the bankruptcy is a chapter 7 bankruptcy, then there are tighter restrictions on what can and can’t be discharged. Nondischargeable debts in chapter 7 include: most taxes, child support, fines owed to any governmental institution, student loans in most cases, criminal restitution debts, marital property settlement debts, and debts for repayment of loans from pension plans. Chapter 7 as a fresh start is able to completely discharge most forms of unsecured debt excluding the previously mentioned exceptions. Chapter 13 on the other hand is not as restrictive as chapter 7 because in a chapter 13 bankruptcy most of the previously nondischargeable debts should be included within the chapter 13 repayment plan. Nondischargeable debts in chapter 13 include: long-term debts with final payments due after the completion of the plan (e.g. mortgages/vehicle loans), tax debts, debts incurred through fraud, debts that aren't listed in the bankruptcy, child support, drunk driving debts, and most criminal fines and restitution debts.

To better understand if filing for bankruptcy is the right action for you, it is recommended that you set up a consultation with a local bankruptcy attorney.

Should I File for Bankruptcy Jointly With My Spouse?

In general filing jointly is more beneficial than filing separately. These benefits include only having to pay for one filing fee rather than two, having both debtors achieve their discharges simultaneously, and in general maximizing the efficiency of the filing process. The two debtors are not completely consolidated into one case, but much of their estate in terms of joint debts and joint property overlap. There are a few exceptions towards filing jointly however. The most obvious is if your spouse does not want to participate in filing for bankruptcy you can still file individually. Another exception would be if one spouse is unable to file because of a prior bankruptcy, or if both spouses filing would violate the guidelines for either chapter 7 or 13. The most important exception involves protection of nonexempt property, where the spouse who holds most of the nonexempt property doesn’t file while the one who requires the bankruptcy files. This way both spouses avoid having to liquidate their nonexempt property.

To better understand if filing for bankruptcy is the best action for you, it is recommended you set up a consultation with a local bankruptcy attorney.