While filing for bankruptcy can give you a chance at new start by offer some relief from your debts, it will not apply to all of your obligations. With the different types of financing schemes being offered by lending institutions today, there are now a lot of types of “uses” for money, not to mention many more types of debts to be incurred.
If your financial situation is that bad and you are eyeing filing for bankruptcy as an option, you have to know what debts can be discharged by pursuing this course. Here are some of the common types of debts that can be discharged through bankruptcy.
1. Credit card debt
Majority of Americans carry that little piece of plastic around with them all the time. It is easy to pull out and use, there is very little fuss except to sign the receipt and any transaction you make is a done deal. It doesn’t matter if you are buying coffee, groceries or even a car. This convenience and ease of use is the reason why credit card debt is the most common type of debt people have today. However, the good news is that bankruptcy usually eliminates all credit card debt so you can get the fresh start you need.
2. Medical bills
Another common bill is the medical bill. Who hasn’t gotten sick or hasn’t been taken to the hospital for any medical emergency? Majority of people have been seriously ill at least once in their lives. And with today’s economy doctor’s rates don’t come cheap anymore, not to mention the whole lot of other items that find their way into the bill. Again, the good news is medical bills are also covered under bankruptcy.
3. Mortgage debt
When you mortgage a house or any piece of property or land, you are offering that house, property or land as a guarantee so you can borrow money from any lending institution. This is often a risky move as people have lost homes and property taking on debts they thought they could pay but couldn’t. With the bankruptcy option, the outstanding mortgage debt, plus any default fees and other charges on top of your mortgage account, is discharged through bankruptcy once you relinquish the property.
4. Vehicle Loans
These days private transport is a must for many individuals, and that’s why many people opt to get car loans. The bad news is not all who get loans can pay them, but the good news is that car loans are also covered for discharge if you file for bankruptcy. However, like the mortgage, the vehicle loan, plus any default fees and other charges, will only be discharged once you surrender the vehicle.
5. Unpaid tax debts
Contrary to popular belief, some unpaid tax debts can be discharged under bankruptcy. However, some requirements in the bankruptcy code have to be met for this to happen.
6. Personal Loans
Personal loans are those provided based on the signature of the borrower alone. Since this type of loan is unsecured, which means you did not have to put up property as a guarantee to pay it, you risk losing no property to lending institutions.