People file bankruptcy, so that they can get rid of debt by obtaining what is called a "discharge." But what is a bankruptcy discharge? Simply put, it is what wipes out your debt and gives you a fresh start. It also acts as a permanent injunction against creditors from coming after you to collect that debt.
Any creditor violating the discharge injunction can be subjected to serious sanctions by the bankruptcy court. This discharge wipes out different kinds of debt, depending on the type of bankruptcy you file, and there are exceptions.
Chapter 7 Bankruptcy
A chapter 7 discharge wipes out most types of debt, but there are exceptions you should be aware of, such as:
- Certain taxes (or debts incurred to pay same, like a personal loan or credit card)
- An obligation incurred through fraud
- Alimony and child support (or anything considered to be a "domestic support obligation.")
- A debt arising through the willful and malicious injury to person or property
- Student loans (absent a showing of "undue hardship")
- Death or injury caused by driving while impaired (drugs, alcohol, etc.)
- Criminal restitution and fines
- Debts and obligations incurred as a part of a divorce
- NJ Motor Vehicle Surcharges
Chapter 13 Bankruptcy
A chapter 13 discharge is broader in scope, but still excepts:
- Taxes where the debtor didn't file a return or filed a fraudulent return
- An obligation incurred through fraud
- Alimony and child support (or anything considered to be a "domestic support obligation.")
- Student loans (absent a showing of "undue hardship")
- Death or injury caused by driving while impaired (drugs, alcohol, etc.)
Many debts are discharged in a chapter 13 because they have been paid, at least in part. This is not an exhaustive list, however, so you should consult with a bankruptcy lawyer to find out more.
What Should I Do?
The decision to file bankruptcy often turns on whether it will effectively wipe out your debt. So that decision should really be made with the assistance of an experienced bankruptcy attorney.
If you line in Burlington, Camden, Gloucester, Salem or Cumberland County, are thinking about bankruptcy, and have questions about whether a debt you have can be discharged in bankruptcy, to call me at 856-432-4113 or contact me through this site for a free consultation in my Woodbury office to discuss your case.
If you are looking for more information about bankruptcy, then download my free book, Top Questions People Ask About Filing Bankruptcy in New Jersey.
Not sure if bankruptcy is right for you? Take the quiz to the right to find out more!
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