I just wrecked my car (and someone else’s). Will bankruptcy take care of that?

Yes, unless you were doing something really, really bad.

When you file bankruptcy, most debts can be discharged (wiped out). Some debts have a priority status, like most taxes, student loans, child support/alimony, and criminal restitution. Those debts are NOT discharged by the bankruptcy.

So let’s say that you’re in a car accident and your financed car is wrecked. Hopefully, your insurance will cover it and pay the lender. But, sometimes insurance lapses, or doesn’t cover the whole loan balance. In that kind of situation, you can file bankruptcy and list the car loan balance in the bankruptcy. If there is a deficient balance that is not covered by your insurance, or your deductible, or lack of insurance, that balance will be wiped out by the bk.

As for the other car, if it’s your fault, hopefully your insurance will cover it. Unfortunately, there are times when you are not carrying insurance. (Shame on you)! In that kind of situation, the other driver might even sue you for the damages you caused. This debt can be listed in your bankruptcy.

But here’s the caveat: sometimes the damage to the other driver may NOT be discharged by the bk. This only happens if you were doing something really, really bad. If you did it willfully, or maliciously, or while intoxicated, you be NOT protected by the bankruptcy.

Under 11 U.S.C 523, these kinds of debts are not dischargeble:

(6)for willful and malicious injury by the debtor to another entity or to the property of another entity;

(9)for death or personal injury caused by the debtor’s operation of a motor vehicle, vessel, or aircraft if such operation was unlawful because the debtor was intoxicated from using alcohol, a drug, or another substance;

See 11. U.S.C. 523