Credit cards and other dischargeable debt
A Chapter 7 filing will almost immediately discharge credit card debt. Chapter 7 can also discharge medical debt, personal loans, and promissory notes.
Chapter 13 is not a pure discharge because it allows for the reorganization of credit card and other debt and repayment over time. A court may order the repayment of some of your debt based upon your income and expenses. After you repay the portion of your debts ordered by the court, the remainder of the outstanding debt is discharged.
Some debts may be partially reduced though Chapter 13 which allows debt reorganization and partial repayment. These include court fees, retirement plan loans, debt from non-dischargeable tax debt, debts that could not be discharged in an earlier bankruptcy and fees from cooperatives, condominiums and HOAs.
Debts that cannot be discharged
There are three types of debt that may not be discharged. The first category is debts that can never be discharged. These include spousal and child support, many types of taxes, most tax liens fines, and penalties for violating the law and personal injury debts from drunk driving accidents.
The second group involves debt that may not be discharged because a creditor successfully objects. This includes debts from fraud, debts for items purchased within 90 days of the bankruptcy filing, debts or creditors that were not contained in the bankruptcy petition and debts from embezzlement, larceny, or breach of fiduciary duty.
The third category is debt that may be discharged through various legal exceptions or a persuasive argument in your case. Student loans are in this category and are exceedingly difficult to discharge. Debtors must show undue hardship and the courts rely on various tests to determine whether that discharge is permitted.
Income taxes are also in this third group. Discharge must meet legal requirements and a specific amount of time must elapse.
Bankruptcy may impact your credit score and have other consequences. An attorney can help you explore options other than bankruptcy. If bankruptcy is appropriate, they can help you seek all the protections that apply to your case.