Debts that are always dischargeable

Medical Bills

According to estimates over 40 million Americans are without health insurance. Exorbitant medical bills are a major reason why people get into financial trouble.

Fortunately bankruptcy provides a solution. Medical bills are dischargeable in bankruptcy so that after discharge you are no longer responsible for paying any of those bills.

Credit Card Debt

You can expect that your credit card debt will be discharged in your bankruptcy. Exceptions to dischargeability are fraud, false statements on the credit card application or recent large credit card charges just before you file for bankruptcy. If any of these exceptions apply it is important to seek the advice of a bankruptcy attorney.

Judgment Debt

In recent times many people in California have been faced with foreclosure of their homes. In some instances the banks do not stop after the foreclosure but pursue the home owner with collections and lawsuits. This happens when the bank or mortgage holder believes that the loan was a recourse loan. If the loan was recourse the lender has the legal right to personally sue the home owner even though the house has been foreclosed. If the lender obtains a judgments against the home owner for the difference in what the home was sold for at the auction or as a bank owned house and the amount of the loan then the home owner can use bankruptcy to “clear the judgment”. Bankruptcy discharges any debts owed to the judgment debtor.

Contract Debt

More and more people have obligations under leases such as car leases and equipment leases. Obligations under leases are dischargeable in bankruptcy. This includes penalties and late fees.

Contract and lease obligations are dischargeable in over 90% of all cases unless the trustee decides that there is some value to the contract or lease in which case the trustee may take over the lease. A proper valuation of the lease or contract is important to achieve the best result through bankruptcy.

Loan Debt

Unless the creditor can prove that you acted fraudulently money you owe to someone from a promissory note or any other personal loan contract be it an oral contract or a handshake, is dischargeable in bankruptcy.