Does Filing for Bankruptcy Discharge All Your Debts?

Experienced Georgia law firm can clarify how to resolve your debt situation

A common question people have about bankruptcy is which of their debts can be eliminated and to what extent. While bankruptcy can provide relief from many financial obligations, not all debts are treated the same way. Certain debts, such as credit card balances, medical bills and personal loans, are often dischargeable. Others, including some tax obligations, child support, alimony and many student loans, may remain enforceable after a bankruptcy case is completed. At Jeff Field & Associates, we have more than 30 years of experience helping Georgia residents through financial straits. We will evaluate your debt situation and devise a strategy best suited to helping you pursue a fresh start.

What debts does bankruptcy discharge?

In Chapter 7 bankruptcy, a debtor can be relieved of having to repay many types of unsecured debts, namely those that do not involve liens on property. Dischargeable debts can include the following: 

• Credit card balances
• Medical bills
• Personal loans
• Utility balances
• Collection of account debts
• Certain older tax obligations
• Deficiency balances from repossessions
• Payday loans

While Chapter 7 eliminates qualifying debts, Chapter 13 bankruptcy allows debtors to repay debts through a structured repayment plan. Which option is most appropriate depends on your circumstances. 

What debts do not qualify for discharge?

Although bankruptcy can eliminate many financial obligations, some debts survive. This is because the law prioritizes certain legal responsibilities and public policy or statutory exemptions forbid discharge.

Non-dischargeable debts often include:

• Recent tax debts
• Child support obligations
• Alimony payments
• Court fines and criminal restitution
• Debts caused by fraud
• Debts connected to intentional injury or misconduct
• Certain condominium or homeowner association fees

Understanding which debts survive bankruptcy is important in deciding whether filing Chapter 7 or Chapter 13 best serves your goals.

Can student loan debt ever be discharged?

Federal and private student loans are generally treated differently from credit cards and medical bills. In most bankruptcy cases, student loan debt does not qualify for discharge.

However, there is a limited exception. A debtor may seek discharge of student loan debt if repayment would create an undue hardship. Courts apply a very strict standard when reviewing these requests and the burden of proof is high. To pursue this type of discharge, the debtor must usually prove: 

• They cannot maintain a basic standard of living while making payments
• Their financial hardship is likely to continue long-term
• They have made good-faith efforts to repay debts before filing

Because these cases are difficult, many people choose Chapter 13 bankruptcy to reorganize and repay debts, including student loan obligations, over an extended period of time. 

Although student loan discharge is uncommon, bankruptcy may still help create a fresh start by reducing other financial burdens that compete with loan payments.

Is repaying debts ever a better option than seeking a bankruptcy discharge?

In some situations, repaying debts through Chapter 13 bankruptcy may provide better long-term benefits than attempting to discharge debts under Chapter 7. Chapter 13 allows individuals to repay debts through a court-approved payment plan that lasts 3 to 5 years. This option may help debtors:

• Catch up on mortgage arrears
• Prevent vehicle repossession
• Protect valuable property
• Repay certain tax obligations over time
• Consolidate monthly payments into one plan

For debtors with steady income, Chapter 13 can create a more manageable path toward financial recovery while allowing them to keep important assets. It can also help individuals whose income exceeds Chapter 7 qualification limits obtain the debt relief they need.

Contact an experienced Georgia bankruptcy attorney for a free consultation

At Jeff Field & Associates, we will review your situation and help you understand what bankruptcy can do to resolve your debts and help you move forward. We have offices located in Bogart, Douglasville, Gainesville,  Lawrenceville, Marietta and Decatur, Georgia. Call 404-381-1278 or contact us online to book a free initial appointment