Which Debts You Can Erase
As a New Jersey bankruptcy attorney this is by far one of the most critical aspects of my job – determining which debts are dischargeable in bankruptcy and which are not. Let me explain…
Unsecured Debt
Unsecured debt is any type of debt that is not secured by any of your property. For example, credit cards and medical bills are hardly ever secured by any other your property. I can help my clients wipe out ALL of their unsecured debt in bankruptcy.
Secured Debt
Secured debt is any type of debt that is secured by your property. A car loan is typically secured by the car. If for any reason you default on the loan they can always repossess the car. Home loans also work the same way. In bankruptcy, you can choose how you want your secured debt to be treated. For example, if you have a car loan you can reaffirm that debt if you want to keep the car. Another option is that you can surrender the car and wipe out any debt you may be liable to the car company for. A third option is to redeem the loan i.e. to pay the market value (not the payoff balance) of the item when you file for bankruptcy and the debt will be discharged in bankruptcy.
Most Debts are Dischargeable in Bankruptcy – A Few Are Not
There are a few debts that are not dischargeable in bankruptcy such as debts you owe on alimony, child support, and student loans. While it is technically possible to discharge student loans, it is almost impossible to get them discharged because the requirements and test for qualification are so difficult. Back taxes are also difficult to get discharged but it is possible.
Please call me and I will help you find out which debts you can discharge in bankruptcy. Give my office a call and I will give you a free phone consultation now.
Most of your debts are probably dischargeable (i.e. you can wipe them out to $0 in bankruptcy with no tax consequences). Examples of debts you can wipe out in bankruptcy are credit card debts, medical bills, and many others.