Some Bankruptcy Debts Can Be Discharged

In court, some bankruptcy debts can be discharged from the debtor and their slate wiped clean. Filing bankruptcy can be a heart-wrenching experience but being relieved of paying some debts can help you start out all over again. A good starting point in understanding bankruptcy debt is determining just who is liable for the debt in question.

Responsibility for bankruptcy debts lies with the person that incurred the debt in the first place. In general, you are liable (responsible to pay) for any debt that you started. Some examples of incurred debts include: goods bought on your credit card; personal loans in which you signed for, and debts incurred in operation of your business, if you are the owner. Debts can arise as the result of contracts, torts, (arising from your negligence or harmful intent), and statute (acts of the government.) You are not individually responsible in bankruptcy for the debts of your spouse on their credit card, their torts, and taxes they may owe if you filed separately.

Some bankruptcy debts are dischargeable in bankruptcy court; others are not. The purpose of filing a bankruptcy proceeding is to obtain a discharge of debts. When debt is discharged in bankruptcy court, they are no longer enforceable against the debtor personally. Some of the dischargeable debts that you can be relieved of through bankruptcy include: personal loans, credit card debt, leases, and most business debts. Examples of non-dischargeable debts are taxes, child support, and student loans.

Bankruptcy debts usually are not secured loans and cannot be discharged in bankruptcy court. A secured loan is one that is associated usually with property. Examples of secured loans are home mortgages, equity lines of credit, and car loans. These are carry liens created by agreement between the debtor and the creditor. In most cases, the creditor can take repossession of the property if the debt is defaulted on, no matter if bankruptcy is granted or not.