What Kinds Of Debts Are Usually Discharged In Bankruptcy Cases?
Debtors are eligible to discharge a wide range of debts in consumer bankruptcy cases. Indeed, some of the most common types of debts held by consumers can be discharged relatively quickly in Chapter 7 bankruptcy cases, as well as at the conclusion of a Chapter 13 bankruptcy case. If you are considering filing for personal bankruptcy in South Florida, you might be wondering if the debts you owe are likely to be discharged. While it is extremely important to have a West Palm Beach bankruptcy lawyer evaluate your case and your particular circumstances, the following are some of the most commonly discharged types of debts in consumer bankruptcy cases.
Medical Debt
Medical debt is one of the most common types of debt in the U.S., and it is frequently the sole reason and often among the leading reasons for an individual to file for personal bankruptcy. According to the Kaiser Family Foundation (KFF), approximately 10 percent of all adults in the U.S. owe medical debt, and millions of those Americans owe more than $10,000 in medical debt. Indeed, the KFF estimates that about 3 million people currently owe more than $10,000 in medical debt and do not have ready means to pay it off. The majority of adults with significant medical debt are between the ages of 35 and 64 since they need more health care than younger adults and did not qualify for Medicare coverage when obtaining care or treatment.
For many of these individuals, medical debt drives the decision to file for bankruptcy, and medical debt is almost always dischargeable through bankruptcy.
Credit Card Debt
According to Debt.org, credit card debt declined somewhat during the early months of the pandemic and throughout 2020, but recent estimates show that credit card debt has again begun to increase. Even at its lowest point during the pandemic, Americans collectively owed about $73 million in credit card debt. It is important to know that most credit card debt can be discharged in a consumer bankruptcy case, but it will be important to discuss the specifics of your case with a bankruptcy lawyer.
Personal Loan Debt
Personal loan debt has also become a common type of debt discharged in consumer bankruptcy cases. Based on data from debt.org, personal loan debt has increased by about 6 percent since the start of the pandemic.
Mortgage Debt
Similar to personal loan debt, mortgage debt has also risen since the start of the pandemic. Mortgage debt is often dischargeable in bankruptcy cases, although having mortgage debt discharged in a Chapter 7 bankruptcy case does not mean you can keep your home. In order to use bankruptcy to catch up on mortgage payments and remain in your home, you will need to file for Chapter 13 bankruptcy.
Contact an Experienced West Palm Beach Bankruptcy Attorney
When you are thinking about filing for bankruptcy and want to learn more about the dischargeability of your debt, or if you need general assistance with your bankruptcy case, you should seek help from a bankruptcy attorney. One of the experienced West Palm Beach bankruptcy lawyers at Kelley Kaplan & Eller can begin working with you on your bankruptcy case today.
Sources:
kff.org/health-costs/press-release/1-in-10-adults-owe-medical-debt-with-millions-owing-more-than-10000/#:~:text=Americans%20Likely%20Owe%20Hundreds%20of,who%20owe%20more%20than%20%2410%2C000
debt.org/faqs/americans-in-debt/demographics/#:~:text=The%20total%20U.S.%20consumer%20debt,personal%20loan%20debt%20(6%25)
