Debts Erased in a Bankruptcy

When you receive your discharge from bankruptcy the debts erased are all of your eligible debts that existed at the time of the bankruptcy filing.

You must include all of your debts in your bankruptcy paperwork.

However, when you receive your bankruptcy discharge only eligible types of debts will be erased in bankruptcy; some types of debts cannot be included in bankruptcy.

Debts erased by the bankrupt’s discharge are all debts except for the following:

• Fines imposed by a Court;

• Money owing for things stolen;

• Things obtained by misrepresentation;

• Alimony or maintenance payments;

• Award of damages by a court for intentionally inflicting bodily harm or sexual assault;

• Student loans if bankruptcy is filed prior to or within seven years after the finish of studies;

• Debts that were incurred during the time you were bankrupt.

What About Secured Debts in Bankruptcy?

Secured debts cannot be erased by bankruptcy either as you have put up the asset that secures the debt as collateral in case you do not maintain the required payments.

If you have a shortfall on what is owed on a secured debt versus what it is worth you can include this debt in your bankruptcy.

Unsecured debts such as credit card debt, income tax debt owed to the CRA and other debts that are not secured by an asset are the most common debts that can be erased by going bankrupt.