Dischargeable DebtCredit Repair Definition
A type of debt that can be legally eliminated or wiped out through bankruptcy.
Definition
Dischargeable debt refers to types of debt that can be legally forgiven or eliminated upon the successful completion of a bankruptcy case (either Chapter 7 or Chapter 13). When a debt is discharged in bankruptcy, the debtor is no longer personally liable for repaying it, and creditors are legally prohibited from attempting to collect it. Most common types of unsecured debt are dischargeable, including credit card debt, medical bills, personal loans, and utility bills. However, certain types of debt are generally non-dischargeable, meaning they typically cannot be eliminated through bankruptcy.
Frequently Asked Questions
What are common examples of dischargeable debts?
Common dischargeable debts include: credit card balances, medical bills, personal loans (unsecured), payday loans, past-due utility bills, and balances from repossessed vehicles (deficiency balances, unless secured by other means).
What types of debt are usually non-dischargeable?
Common non-dischargeable debts include: most student loans (except in cases of extreme hardship), recent income tax debts, child support and alimony obligations, debts incurred through fraud or false pretenses, debts for personal injury caused by drunk driving, and most criminal fines and restitution.
Does filing for bankruptcy automatically discharge all dischargeable debts?
Generally, yes, upon successful completion of the bankruptcy process (receiving a discharge order from the court). In Chapter 7, this happens relatively quickly after liquidating non-exempt assets. In Chapter 13, the discharge occurs after completing the 3-to-5-year repayment plan.
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