There are two types of debt for bankruptcy purposes: dischargeable and non-dischargeable. The liability for all dischargeable debts is removed upon filing for bankruptcy.
Are All Debts Discharged If I File for Bankruptcy?
Bankruptcy is a serious matter and filing for it fraudulently is a crime. Additionally, doing so will not clear you of all debts if your debts include any of the following non-dischargeable debts:
- Federal, state and local tax claims
- Customs duties
- Spousal support
- Child support
- Student loans
- Secured debts
- Government imposed fines and penalties
- False statement debt incurred
- Fiduciary fraud such as embezzlement or larceny
- Punitive damage claims for acts found to be willful or malicious
- Debts not accounted for on court forms
- Obligations obtained from drunk driving incidents
Many of these debts are simply not dischargeable because of public policy reasons.
Does the Same Apply to a Business Bankruptcy?
If you file for a Federal bankruptcy for your business most debts are discharged with the exception of debts incurred due to fraudulent business practices.
Is It Possible to Protect Some Property from Bankruptcy?
You can exempt some property from bankruptcy. Only property that is exempt under federal or state law can legally be exempted. Generally, about $2,000-4,000 worth of personal property and some home equity is included as possible exemption from bankruptcy.
Do I Need a Bankruptcy Lawyer?
Whether you are filing chapter 7 or chapter 13, bankruptcy can be a complicated process. It is vital to know how the law regulates bankruptcy in your state, including what property exemptions you can claim. An experienced bankruptcy lawyer knows the ins-and-outs of filing for bankruptcy, and can recommend what chapter of bankruptcy is right for you.