Legal Definitions - dischargeable claim

A dischargeable claim refers to a debt or other financial obligation that can be legally eliminated or "wiped out" through a bankruptcy proceeding. When a claim is discharged, the person or entity filing for bankruptcy is no longer legally required to pay that specific debt. This allows individuals or businesses to achieve a fresh financial start by shedding certain types of liabilities, though not all debts are dischargeable.

Here are some examples to illustrate this concept:

• Credit Card Debt: Imagine Maria accumulated $20,000 in credit card debt after a period of unemployment and unexpected home repairs. When Maria files for Chapter 7 bankruptcy, her credit card debt is typically considered a dischargeable claim. Upon the successful completion of her bankruptcy case, she will no longer be legally obligated to repay the credit card companies, allowing her to move forward without that burden.

• Unpaid Medical Bills: Consider John, who incurred significant medical expenses after an emergency surgery, leaving him with $30,000 in bills that his health insurance did not fully cover. If John decides to file for bankruptcy, these unpaid medical bills would generally be classified as dischargeable claims. This means that after his bankruptcy is finalized, the hospitals and healthcare providers cannot legally pursue him for payment of these specific debts.

• Personal Bank Loan: Sarah took out a $15,000 personal loan from her bank to consolidate some smaller debts, but then faced a severe reduction in income, making repayment impossible. Assuming this personal loan was unsecured (meaning it wasn't backed by collateral like a car or house), it would typically be a dischargeable claim in Sarah's personal bankruptcy. The bank would lose its legal right to collect the remaining balance once the bankruptcy process is complete.