What Debts Are Discharged in Bankruptcy?

Bankruptcy can offer a fresh start—but not all debts are treated equally. If you’re a Manitoba resident considering this path, it’s essential to understand what debts will be wiped clean and which ones will stick around.

Here’s a list of debts that are typically discharged in bankruptcy:

1. Credit Card Debt

Most unsecured credit card balances are eliminated in bankruptcy, making this a common reason Manitobans file.

2. Personal Loans and Lines of Credit

Unsecured loans and personal lines of credit are generally discharged.

3. Payday Loans

These high-interest loans can be discharged, offering significant relief.

4. Income Taxes

Personal income taxes owing are usually included.

5. Utility Bills

Unpaid gas, electricity, or phone bills may be wiped out in bankruptcy.

However, here are debts that are not typically discharged:

1. Student Loans (Less Than 7 Years Old)

If it’s been less than 7 years since you stopped attending school, your student loan debt will remain.

2. Court-Ordered Fines and Penalties

This includes parking tickets, court fines, and any court-imposed penalties related to criminal activity.

3. Child and Spousal Support

Support payments ordered by a court or agreed to between spouses are not dischargeable under bankruptcy.

4. Debts Arising from Fraud or Misrepresentation

If a creditor can prove that fraud occurred, that debt will survive bankruptcy.

Real-Life Manitoba Example:

A Winnipeg couple with $60,000 in unsecured loans and maxed-out credit cards filed for bankruptcy and eliminated most of their debt. However, the husband’s recent student loans and overdue support payments to a previous partner remained.

Final Thoughts:

Filing for bankruptcy is a big decision, and understanding what is discharged can help you avoid surprises. Lazer Grant’s Licensed Insolvency Trustees in Manitoba can walk you through your unique situation and recommend the best course of action.

Need help navigating bankruptcy? Contact our Winnipeg team for a no-obligation consultation.