| Bankruptcy Law - Questions & Answers
Is it true I can cancel
all debts by filing bankruptcy?
The underlying policy of bankruptcy
law is that the honest debtor who is in debt beyond
her ability to repay the debt should receive a
fresh start through the discharge of debts. A
discharge is a release from personal liability
for certain debts.
However, some debts must still
be paid. These are known as nondischargeable debts.
Generally speaking, they include taxes less than
three years old; spousal and child support; debts
arising out of willful misconduct or malicious
misconduct by the debtor; liability for injury
or death from driving while intoxicated; nondischargeable
debts from a prior bankruptcy; student loans;
criminal fines and penalties.
In many cases, debts that cannot
be discharged in a Chapter 7 case may be discharged
in a Chapter 13 case.
Secured debts also may be discharged,
but the secured creditor is entitled to get back
the collateral or its value. Debtors can avoid
this result by continuing to pay their secured
loans during bankruptcy and entering into an agreement
with the creditor to continue paying the note
after the bankruptcy is over, if necessary.
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