What Debts Can and Can’t Be Discharged in Texas Bankruptcy?

When considering bankruptcy in Texas, understanding which debts can be discharged is crucial. Bankruptcy provides individuals a fresh start, but not all debts are treated the same. Below, we explore the types of debts that can and cannot be erased during Texas bankruptcy proceedings.

Debts That Can Be Discharged in Texas Bankruptcy

1. Unsecured Personal Loans: These loans, which do not have collateral backing them, can usually be discharged. This includes personal loans from friends, family, or financial institutions.

2. Credit Card Debt: Accumulated credit card debt is among the most common debts that can be wiped away through bankruptcy. Since these are unsecured debts, they can often be eliminated entirely.

3. Medical Bills: Unpaid medical expenses can be overwhelming. Fortunately, these debts can typically be discharged, allowing individuals to alleviate their financial burden.

4. Utility Bills: Debts related to unpaid utility services, such as water, electricity, and natural gas, can also be discharged, providing relief to individuals facing financial difficulties.

5. Certain Personal Taxes: While not all tax debts can be discharged, some may qualify, particularly older income taxes that meet specific criteria.

6. Judgments from Lawsuits: If you were sued and a judgment was placed against you for a debt, this judgment can often be discharged in bankruptcy.

Debts That Cannot Be Discharged in Texas Bankruptcy

1. Secured Debts: Loans backed by collateral, such as mortgages and car loans, generally cannot be discharged. If you wish to keep the asset associated with the debt, you usually must continue making payments.

2. Student Loans: In most cases, student loan debts are not dischargeable in bankruptcy. However, there may be exceptions if you can prove “undue hardship,” which is difficult to establish.

3. Alimony and Child Support: Obligations for alimony or child support payments cannot be eliminated through bankruptcy. These debts are prioritized to ensure the financial support of dependents.

4. Certain Taxes: While some older tax debts may be dischargeable, recent tax debts, property taxes, and payroll taxes generally cannot be wiped out through bankruptcy.

5. Debts from Fraud: Any debts that arise from fraudulent activities, such as using a credit card without the intention of paying it back, are not dischargeable.

6. Government Fines and Penalties: Debts owed to government entities for fines, restitution, or penalties cannot typically be discharged in bankruptcy.

Conclusion

Understanding what debts can and cannot be discharged in Texas bankruptcy is essential for anyone considering this financial pathway. Consulting a qualified bankruptcy attorney in Texas can provide personalized guidance and help decipher the complexities of bankruptcy laws, ensuring individuals make informed decisions regarding their financial future.