Out of all the reasons to declare bankruptcy, arguably the most beneficial to you is the discharge of unsecured debts. When a debt is discharged, you are no longer responsible for it. Your creditors cannot attempt to collect on the debt and you have no obligation to ever pay it down.
It is worth noting, however, that not all debt can be discharged. Non-dischargeable debt will survive the bankruptcy process, and your creditors can pursue you once your bankruptcy has completed. Below, we discuss the common types of debt that may be discharged in Nevada. But to get a complete picture of how discharge works in a Nevada bankruptcy, contact the experienced attorneys with Vohwinkel Law today.
Types of Dischargeable Debt in Nevada
The reasons that some types of debt cannot be discharged vary, and the way each bankruptcy court resolves these debts can vary depending on the type of case you have filed. In a chapter 7 bankruptcy, the judge can rule certain debts do not qualify for discharge. But in a chapter 13 bankruptcy, the court may require that you put the debt in your plan and pay it down.
Credit Card Debt
One of the common reasons for filing bankruptcy is overwhelming credit card debt. That isn't a surprise, given that Americans carry approximately $420 billion in credit card debt from one month to another.
Unsecured Personal Loans
If you owe a debt to a friend or a family member, it may be dischargeable in bankruptcy. It is important to differentiate a secured personal loan from an unsecured debt. If your personal loan is secured by some type of collateral, it will not be discharged at the close of your case.
Another type of debt that frequently leads to a bankruptcy filing is medical debt. In fact, medical bills are the single largest cause of bankruptcy filings in the United States. Typically, medical bills are not secured which allows for it to be discharged once your bankruptcy comes to an end.
In most cases, debts owed to government entities like state and federal tax authorities cannot be discharged. But despite their quasi-governmental nature, the same cannot be said for utility bills. It is possible to discharge your past due utility bills in both chapter 7 and chapter 13 bankruptcies. However, it may be more difficult to get new service from utilities if you discharge past due bills, and they may require additional deposits to establish new service.
When Debts are Dischargeable
There are other requirements for a debt to be dischargeable outside of the type of debt. The time at which the debt was incurred also plays a role in whether or not a debt may be discharged. To be discharged, a debt must be pre-filing. A post-filing debt cannot be discharged.
Any debt incurred before your bankruptcy petition has been filed is known as a pre-filing debt. All of the debt you incurred prior to your bankruptcy must be included in your bankruptcy petition for it be dischargeable. Once your bankruptcy case ends, the judge will enter an order discharging all of your qualifying pre-filing debt.
Post-filing debt is any debt you incurred after the date of your bankruptcy petition. Your bankruptcy is effectively a snapshot of your financial situation at the time that you file, so any post-filing debt will not be discharged at the close of your bankruptcy case. In fact, your creditors can pursue these debts even while your bankruptcy case is open.
Discuss Your Discharge Options with a Nevada Bankruptcy Attorney
The examples discussed above are only a few of the broad categories of debt that may be discharged through a Nevada bankruptcy. There is a wide array of debt that may qualify for a discharge, assuming that it meets all the necessary requirements and was incurred prior to the bankruptcy filing. To get a full understanding of whether your debts are dischargeable in bankruptcy, discuss your case with an experienced Nevada bankruptcy attorney right away. The bankruptcy attorneys with Vohwinkel Law are ready to help you get the fresh financial start you need.