Seasoned Knoxville Bankruptcy Attorney Identifies Dischargeable Debts
Attentive Tennessee lawyer assesses what obligations can be eliminated
Some people believe that bankruptcy results in a cancellation of all their debts. However, it is important to understand that only certain debts can be discharged through bankruptcy while other obligations may remain fully intact at the end of the process. At William E. Maddox, Jr. LLC, Attorney at Law in Knoxville, I help East Tennessee residents assess their past-due bills and finances to determine what debts may be eliminated through Chapter 7 and Chapter 13 bankruptcy.
Dedicated debt relief adviser guides you through debt cancellation process
Debt discharge occurs at the end of bankruptcy when you have fulfilled all steps of your Chapter 7 liquidation or Chapter 13 repayment plan. Eligible debts left over at the end of bankruptcy may be discharged by the judge, eliminating your legal obligation to pay your creditor. When nondischargeable debts are not fully paid during bankruptcy, those debts cannot be canceled by a court.
There are several types of nondischargeable debt. Money owed to the government for taxes or student loans are typically not eligible for elimination. Child support and alimony arrearages and other court-ordered payments must also be made.
Medical debt and credit card debt are the most common types of dischargeable debts eliminated through bankruptcy.
Finding the right solution depends on a clear analysis how much of your overall obligation is dischargeable and nondischargeable. With more than 25 years of experience in my field, I can explain the pros and cons of bankruptcy as well as debt relief alternatives.
Types of debt that might be eliminated
In bankruptcy, your disposable income or the proceeds from your liquidated assets are divided among your creditors in order of priority. The priority of a creditor’s claim is based on which of these categories describes the debt you owe:
- Nonpriority unsecured debt — An obligation classified as nonpriority unsecured debt is the type of debt most easily discharged in bankruptcy. An unsecured debt is not tied to a collateral asset that can be repossessed for failure to pay. Credit card debt and medical debt fall within this category.
- Priority unsecured debt — This type of debt is not secured by collateral that can be reclaimed by a creditor. However, the law states repaying these obligations first is in the public interest. Priority debts have to be paid in full before creditors can collect on nonpriority claims. Certain income taxes, child support and other court-ordered payments are types of priority debts.
- Secured debt — Secured debt is based on a piece of property for which a lender has a lien, meaning the property can be repossessed if the debt is not paid. Though a secured debt is not necessarily given priority over another type of debt, these debts must be paid if you want to hold onto the property. Mortgage loans and car loans are types of secured debts.
The vast majority of people who complete Chapter 7 are able to discharge their debt. Still, a discharge may be denied if a creditor or the bankruptcy trustee is able to convince the judge that the debt should remain valid.
I can examine your debts and explain how much of what you owe is likely dischargeable as well as how you may strategically use the Tennessee bankruptcy exemptions to protect certain assets. My objective is to help you emerge from bankruptcy with as little remaining debt as possible.
Contact a reputable East Tennessee bankruptcy attorney for advice on discharging debt
At William E. Maddox, Jr. LLC, Attorney at Law in Knoxville, I advise Knox County residents on how the Tennessee bankruptcy process may be used to eliminate debts while protecting certain assets. To schedule your free initial consultation, call or contact me online.