If you are struggling to get your head about financial water and would like to have a clean slate, you may want to consider bankruptcy. However, it is very important that you don't fall under the misconception that filing for bankruptcy will be able to effectively erase all past debt obligations that you have and all financial mistakes that you have made. If you are interested in personal bankruptcy, keep reading to learn more about the limitations of this financial tool.
What Bankruptcy Can Do
Get Rid of Unsecured Debt
If you have more credit card debt than you can sensibly pay off, it is possible for bankruptcy to assist in the elimination of it. Apart from credit card debt, personal loans, and medical bills are also considered unsecured debts. Unsecured debt can be wiped out entirely if you file Chapter 7 bankruptcy, but the debts will simply be reorganized so it is easier to pay if you file Chapter 13 bankruptcy.
Save Specific Assets
When you file for bankruptcy, it is possible to keep some assets, which are known as exempt property or assets. For instance, if you file for Chapter 13 bankruptcy, it may prevent your home (which has a mortgage on it) from being foreclosed on.
Put a Stop to the Creditors
When you stop making payments on your bills, creditors start calling—often harassing you. By filing for bankruptcy, the letters, phone calls, repossession attempts, foreclosure actions, etc. will come to a halt thanks to the automatic stay that is put into place.
What Bankruptcy Cannot Do
Get Rid of Tax Debt
As a general rule, it is impossible to eliminate tax debt when you file for personal bankruptcy. However, in very rare cases, you may be able to get rid of a small portion of your federal or state income tax if you file for Chapter 13 bankruptcy.
Eliminate Student Loans
Your student debt cannot be erased when filing for personal bankruptcy unless you have experienced a permanent disability or extreme hardship.
Eradicate Alimony or Child Support Payments
Alimony and child support payments also cannot be eliminated by filing for bankruptcy, as these will still be required through the order issued by the court.
If you are struggling financially and can't see the light at the end of the tunnel, don't keep suffering. Get in touch with bankruptcy attorney services today to find out what your debt relief options are.Share