“Will I be able to get rid of all of my debts by filing a bankruptcy?”

The answer is, it depends.  If you qualify for Chapter 7 bankruptcy, (call Manalapan Bankruptcy Lawyer Jignesh J. Shah, to find out if you do), then a majority of your debts may be dischargeable in bankruptcy.  This means that you “wipe the slate clean” and will no longer be responsible for repaying those debts if you obtain a Chapter 7 discharge.

The type of debt that is dischargeable includes credit card bills, medical bills, certain loans and certain judgments. The debts that are NOT dischargeable in Chapter 7 bankruptcy are as follows:

  • Taxes and tax liens (there is a very limited exception, however);
  • Student Loans, unless you can show that payment will impose an undue hardship on you and your dependents (very difficult criteria to meet);
  • Spousal Support;
  • Child Support;
  • Certain luxury purchases over $600 within 90 days of the bankruptcy filing are presumed to be fraudulent.  You can try and defeat the presumption by presenting evidence that it was not fraudulent and you intended to repay the debt.  Just telling a judge that you planned to repay is not enough.  This is where hiring a competent Monmouth County New Jersey Bankruptcy Attorney Jignesh J. Shah can make a huge difference.
    • What is a luxury item?  The bankruptcy code does not define “luxury,” but the law does say that it doesn’t include “goods or services reasonably necessary for the support or maintenance of the debtor or a dependent of the debtor.”  Ultimately, each judge determines on a case by case basis what constitutes a luxury item.  It’s safe to assume that if you maxed out your credit cards in the last 90 days purchasing jewelry, vacations, meals at expensive restaurants, expensive clothing and accessories, brand new car when you already had multiple cars, ATVs, etc., then that debt may not be discharged in bankruptcy.
    • Cash advances that total more than $875 from any one creditor within 70 days of the bankruptcy filing are presumed nondischargeable if they were for a consumer purpose rather than a business purpose;
    • Debts arising out of willful or malicious misconduct;
    • Fines and penalties of government agencies;
    • Debts arising from liability for injury or death from driving while intoxicated;
    • Condominium or cooperative association fees;
    • Debts arising from fraud, such as those involving false financial statements or purchase of items on credit with no intent to pay for them.

In summary, if the debt you are seeking to discharge is not within the “nondischargeable” category then you may be able to discharge it in Chapter 7 bankruptcy.  If, however, your debt falls under the nondischargeable category, it is unlikely to be discharged unless you meet some very narrow exceptions.  If you are concerned that this applies to you, the best course of action is to consult a bankruptcy attorney to see if you qualify for any of the exceptions.