A:

If you file for Chapter 7 or a Chapter 13 bankruptcy, you have the opportunity to discharge several kinds of personal debt and protect yourself from continued creditor action, such as collection attempts or repossession. There are differences between the treatment of certain debts depending on the type of bankruptcy that you file. However, credit card debt, medical bills, personal loans, lease and contract obligations, and unpaid lawsuit judgments are discharged in both Chapter 7 and Chapter 13 bankruptcies.

Chapter 13 bankruptcies reorganize debts rather than liquidating them. Debts that are discharged in a Chapter 13 bankruptcy, but not in a Chapter 7 bankruptcy, include court fees, loans taken from a personal retirement account, debts not discharged in a prior bankruptcy, marital debts from divorce settlements and debts arising from attempts to pay overdue taxes.

Some debts are assumed to be discharged unless your creditor makes a successful appeal to the bankruptcy court. Certain creditor exceptions are relatively easy to obtain, such as debts owed to creditors who were not listed on your bankruptcy filing documents. It is more difficult for a creditor to avoid discharge on other debts, such as those arising from fraud, where sufficient evidence must be brought before the court to warrant a judgment in the creditor's favor.

Other debts are notoriously difficult to discharge, including student loan balances and income tax debt. To be granted a discharge on a student loan, for instance, you must be able to prove undue hardship that is either permanent or lasts for the majority of the length of the note if the debt is paid back in full.

Be sure to list all of your creditors when filing for bankruptcy. It is generally advisable to seek out the help of a knowledgeable bankruptcy attorney to communicate with your creditors and your bankruptcy trustee/court.

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