If you are considering bankruptcy protection to solve a difficult financial situation, it is important to note that some debt cannot be discharged.
For starters, debt such as child support arrears and back taxes that many Americans struggle with cannot be discharged in bankruptcy. Student loan debt is difficult to discharge, reserved for those who can prove extraordinary undue hardship, with discharge meted out on a case by case basis.
Whether debt is discharged can also depend on whether it is secure or unsecured debt. Secured debt is backed by “collateral’, which may include property such as a car or a house. If an individual defaults on a secured mortgage or vehicle loan, the creditor can seize the property in an attempt to satisfy the debt.
Unsecured debt, such as credit card or medical debt and certain personal loans do not have specific property tied to them and are often dischargeable in a bankruptcy. There is no collateral for the creditor to repossess.
If you have questions regarding what debt is dischargeable in bankruptcy, contact bankruptcy attorney Charles E. Covey for more information.