How Bankruptcy Works With 5 Kinds Of Debt

No matter how carefully you save and spend your money, there could come a time where you become overwhelmed with debt. When this happens, many people consider bankruptcy. While bankruptcy works in some situations for relieving yourself of debt, in other situations it does not. By understanding the kind of debts that bankruptcy will and will not help relieve, you will know if it's the right solution to your money problems.

Student Loans

While it is not impossible to have your student loans discharged during due to bankruptcy, some courts may allow it. The catch is that you must prove that paying back your student loan would be a financial undue hardship. This means that if you were to pay back your student loan, it would cause you and any dependents of yours to live in poverty during the majority of the time you are paying off the loan.


The only way you can have your mortgage discharged is if you surrender your home per your creditors' approval. The mortgage will no longer have to be paid, but you can no longer live in the home. One way to continue living in your home is by reaffirming the mortgage. You will continue to pay off the mortgage even after bankruptcy is filed, and the bank will continue to report your loan payments to the major credit bureaus. Since it is very difficult to get a mortgage after filing for bankruptcy, this is a viable option if you want to avoid renting.

Credit Card Debts

If there is no way to pay off your credit card debt, chapter 7 bankruptcy will wipe the debt away at the expense of hurting your credit score. Chapter 13 will not harm your credit score as much, but requires repaying the debt. You will be able to pay it off at a much slower pace, making it more manageable for you.

Hospital Bills

Unsecured debts are not secured by any asset, such as a house or car that your creditor can repossess. This makes it much easier for unsecured debts to be discharged, such as hospital bills. If you are able to qualify for chapter 7 bankruptcy, you can discharge as many hospital bills as you need to.

Child Support

Since child support is ordered to be paid the court, you cannot get it completely discharged. Chapter 13 bankruptcy repayment plans will help you lump past child support bills together and pay them off slowly.

If you are planning on filing for bankruptcy, it is best to hire a lawyer in order to ensure your debts are handled properly. For more information, see sites like