If you did a bit of research, you’ve probably discovered that declaring bankruptcy means that you won’t be liable for most of the debts you have, hence, you won’t need to pay them. However, what most individuals don’t realize is the fact that liquidation won’t cover every debt out there, so, before you register for it, you need to ensure that it’ll cover the ones you have.

This is why you might be wondering – what sorts of debts will be covered if I choose to proclaim bankruptcy? Luckily for all individuals that are wondering the same thing, the article below will shed some light on the entire topic. So, without further ado, let’s take a look at what you have to know:

There Are 2 Varieties of Bankruptcy: Chapter 7 & 13


If you register for chapter 7 bankruptcy, you won’t need to pay most of your dues, but, you’ll need to give up your personal property. Of course, there are exemptions when it comes to personal and/or essential properties, nonetheless, all the non-exempt property will be sold and the money will be shared among the lenders.

On the contrary, chapter 13 bankruptcy will enable you to reorganize the ones you have. This means that you’ll need to work with a trustee and with them, you’ll review the creditors and dues in order to come up with a payment plan. You’ll need to give a monthly payment for at least 3 to 5 years, and after that period, you won’t need to pay the remaining amount.

Discharging Dues: Explained


If your dues are discharged, it basically means that the creditor won’t require you to repay them the money that you owe them. Most varieties of debts could be settled by either of the aforementioned options – either chapter 7 or 13. Keep in mind, if you opt for chapter 13, your dues will be divided into recurrent payments, and the rest will be settled after a specific period of time.

There Are A Few Dues That Can’t Be Eliminated By Liquidation


If you speak to any bankruptcy attorney such as, they’ll tell you that there are some sorts of debts that can’t be eliminated by declaring liquidation, including the following things:

  1. Alimony & Child Support – you won’t be capable of eliminating your obligation to provide alimony and child support. If you already owe a sum of cash when you register for liquidation, you’ll need to pay the amount you owe. So, no matter how much the balance is, you’ll be required to pay it.
  2. Secured Loans – if you bought a vehicle, a property, or other assets with a secured loan, you basically make an arrangement with the lending organization, meaning that they’ll pay for the item in exchange for you using it. If you file for liquidation, you must determine whether you’ll give up the item or if you’ll continue paying for it.
  3. Restitution – if the court orders restitution, it cannot be discharged if you file for liquidation. Restitution means that the court-ordered for you to pay a sum of money for causing personal injuries or economic losses to another person or people. This can include a wide range of things, including operating a vehicle under influence and causing someone harm.
  4. Legal Expenses in Divorce Decrees – in most divorce decrees, one person agrees to pay for the legal expenses or some dues owed by the other person. These cannot be eliminated by bankruptcy, so, for example, if you say yes to paying for the credit card balances in your and your spouse’s name, you cannot eliminate them later on.

Some Are More Complex to Eliminated


Yes, there are some debts that cannot be eliminated, but there are also some that can be eliminated, but the entire process will be a bit more complex and daunting. This includes the following things:

1. Income Tax Liability

You could manage to eliminate some of the income tax liability that you have when you file for liquidation, however, you should know that it will require a specific and really extensive test in order for it to be discharged. This is why you must speak with your bankruptcy lawyer before even thinking about filing the papers.

2. Student Loans

Now, the very first thing that you should know is that the loans you’ve taken out while at university might not be discharged in most cases. In most cases, all types of education loans – federal and private student loans, as well as loans directly from the university cannot be eliminated.

However, there are some exceptions. For starters, one of the options is that you can prove that you cannot work because of permanent or a total disability. Another option is that you can prove undue hardship, meaning that you’ve tried to pay it off, however, entirely repaying it will mean that you’ll maintain a minimal standard of living.

What About Owing Funds to Individuals or Corporations in the EU?


Before we conclude this article, it’s important to mention what occurs if you owe funds to individuals or organizations in the EU. Well, to put it simply, this type of debt may not be covered by liquidation. This means that the creditors might keep requiring the payments by calling or forwarding emails to you.

If you reside in the European Union, they can manage to take you to court there. This is why it’s extremely important for you to speak with an attorney in order to determine what you could do, especially since the EU has different laws and regulations when it comes to filing for liquidation.


Declaring bankruptcy will help you eliminate most types of debts that you might have, however, there are some that you cannot be freed from, including things such as child support, legal fees from a divorce, and so on. This is why you should determine whether or not declaring liquidation is actually suitable for you. Because if you have outstanding debt that cannot be eliminated, collection firms such as Darrell Cook & Associates may come after you.

So, now that you’ve learned what filing for bankruptcy can help you with, you really shouldn’t waste any more of your time. Instead, if you don’t have a lawyer, you might want to start browsing the Internet in order to find someone that is experienced and skilled in their field.