What debts are dischargeable in bankruptcy?

The purpose of filing a bankruptcy, either Chapter 7 or Chapter 13, is to obtain a bankruptcy court order discharging the debtor of liability on debts. The bankruptcy court usually issues a discharge order about two months after the debtor first meets with the bankruptcy trustee.

What debts are discharged in bankruptcy? Section 523 of the Bankruptcy Code lists debts that are excepted from discharge. Unless a debt is excepted, it is discharged.

NEVER DISCHARGED: Some debts are never discharged in bankruptcy; the creditor is not obligated to take any action in bankruptcy to make the debt survive the discharge. The most common are:

DEBTS DISCHARGED UNLESS CREDITOR TAKES ACTION:

Other debts are excepted from bankruptcy ONLY if the creditor files a lawsuit with the bankruptcy court asking that the debt be excepted from discharged. The creditor must file this lawsuit within 60 days of the debtor's first meeting with the trustee (or the creditor must file a motion asking the deadline to be extended.) These lawsuits, called adversary proceedings, costs creditors a lot of money, and so they are not filed unless the amount of the debt is significant.

These exception-to-discharge lawsuits basically involve allegations that the debtor intentionally or recklessly harmed the creditor. They include:

I have extensive experience and knowledge of debt discharge issues in Western New York bankruptcy courts.

I have analyzed every dischargeability lawsuit (adversary proceeding) filed by a creditor in Rochester and Buffalo since 2007, and have identified those creditors most likely to ask for a debt to be excepted from discharge see my blog January 2, 2011.

In both consumer bankruptcy and business bankruptcy cases, the dischargeability of debts is one of the major issues that must be reviewed. Debtors should know, before filing bankruptcy, what debts are dischargeable, which are not, and which might possibly be excepted from discharge. Debt dischargeability issues should never be a surprise.

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