Debts Eliminated in Bankruptcy
A personal bankruptcy filing is meant to erase severe debt. But making a bankruptcy claim does not automatically eliminate all money that is owed. Certain debts remain even after a bankruptcy case is filed.
So before you begin the process of filing a bankruptcy claim, it's important to find out which debts can be eliminated and which ones could stay with you.
Different Types of Debt
The two main forms of personal bankruptcy, Chapter 7 and Chapter 13, are designed to deal with different types of debts in different ways.
For most filers, credit card debt and other unsecured debts can be eliminated through Chapter 7 bankruptcy. Chapter 13 can address these debts by including them in a structured repayment plan.
Other types of debt, such as child support, alimony, many tax debts and student loans, may not be erased through Chapter 7 bankruptcy. Chapter 13, though, may be able to assist you in designing a practical payment plan with the creditors involved in these debts, depending on the specific debt and your unique financial situation.
Benefits of Bankruptcy
While there are certain types of debt that cannot be eliminated through bankruptcy, definite advantages still exist through this avenue of debt relief. In addition to getting rid of the majority of unsecured debt such as credit card and medical bills, bankruptcy can also eliminate creditor harassment.
Once you file a claim and you're in the process of the bankruptcy procedure, creditors and collection agencies are barred from contacting you by the automatic stay.
Additionally, certain liens on your property can be eliminated if you have started a bankruptcy case. A lien is defined as a creditor's right to take all or part of your property due to some kind of debt. Depending on the nature of the debt, bankruptcy can wipe out a creditor's lien.
Connect with a Lawyer Near You Today
Filing bankruptcy can be a very complicated process. Each type of bankruptcy has its own set of advantages and disadvantages, and each state has its own laws that govern the process. But you don't need to navigate this territory alone.
Just fill out the form below to be connected with a bankruptcy attorney familiar with your state's laws and procedures. Take the next step today to arrange a free, no-obligation consultation with a lawyer in your area.