Should I File Bankruptcy?

Every individual situation is unique, so the descriptions and information provided here should not be construed as legal advice.  Anyone contemplating filing bankruptcy should speak with an attorney familiar with their state and its laws.  Oregon residents are encouraged to contact me at noah@bishopbankruptcylaw.com.

Bankruptcy was designed to provide each debtor with a fresh start, but the source of the debt, and the situation surrounding the debtor while they incurred the debt, will determine if it can be discharged in bankruptcy.  Debts are either dischargeable (e.g. an old credit card bill), non-dischargeable (e.g. child support), or quasi-dischargeable (e.g. some taxes may be discharged while others can’t).  When a debt is discharged in bankruptcy, the person who filed is no longer personally liable for the debt and a creditor may not attempt to collect that debt from them.

Here is a non-exhaustive list of how some of these debts are treated in bankruptcy.

Medical Debt:  With skyrocketing health care costs and a difficult economy, many people are faced with mounting medical costs.  These debts are generally dischargeable in bankruptcy if they were incurred prior to the date of filing.  Medical debts incurred after filing are not dischargeable nor are elective surgeries that were obtained with the intent to file bankruptcy on the resulting debt.

Credit Card Debt:  Past credit card debt is generally considered dischargeable, provided that charges weren’t run up in anticipation of bankruptcy.  It is best not to use your credit card once you think that you may have to file bankruptcy.  Exceptions may be made for life necessities, but it is best to talk with an attorney if that may be an issue.

Deficiency Judgments from Repossession or Foreclosure:  Deficiency judgments are dischargeable in bankruptcy provided there was no fraud involved.  For many debtors, bankruptcy is the only solution when a creditor has repossessed their vehicle or foreclosed on their house and then tries to collect the difference between what was owed and what was received at sale.

Unemployment:  Debts owed to the unemployment office are non-dischargeable debts owed to a government entity.

Student Loans:  Although there are unique instances where student loans have been discharged in a bankruptcy, these are the rare exceptions to the rule that student loans are not dischargeable in bankruptcy.

Domestic Support Obligations:  In a Chapter 7, all domestic support obligations are non-dischargeable.  In a Chapter 13 some obligations may be dischargeable (but never child support).