The bankruptcy process offers a fresh start to debtors who qualify. However, it does not discharge all types of debt and some lingering obligations remain after a bankruptcy case is closed. In order to make an informed decision about filing, consumers should understand what debts are excluded from bankruptcy. A Cain & Herren Law Firm can provide valuable advice about whether bankruptcy is a good option, as well as how to prepare the necessary paperwork.
Most unsecured debts can be erased in bankruptcy. These include credit card debts, personal loans and medical bills. Secured debts, such as a home mortgage or car loan, cannot be eliminated through bankruptcy and will still be owed after a case is over. Debts owed for alimony or child support are also not eliminated, as are certain types of taxes.
Debts that are not dischargeable in bankruptcy include student loan debt and federal income tax debt. These kinds of debts can only be addressed through a repayment plan or paid off by liquidating non-exempt property. In addition, a debtor cannot eliminate debts incurred through fraud or willful and malicious injury to persons or property.
Exemptions are the legal protections that prevent a trustee from taking and selling assets to pay creditors in bankruptcy. Many states allow debtors to claim exemptions for essential items, such as food, clothes, utilities and a vehicle. These exemptions vary from state to state, and the amount that a filer can claim can also vary widely.
When filing, debtors must be sure to list all assets in their bankruptcy petition and their values, including those encumbered by liens or encumbrances. A bankruptcy petition with missing or inaccurate information may not be approved. In addition, it is vital for a debtor to discuss their financial situation with a qualified bankruptcy attorney before making any decisions about how to proceed.
One of the most important benefits of bankruptcy is that it stops creditors from harassing a debtor for payments. An automatic stay imposed by the court will stop creditors and collection agencies from calling, texting or otherwise trying to contact a debtor after a bankruptcy is filed. This can help a debtor get some much-needed relief from the stress and pressure of debts that they are unable to repay.
It is not wise to pursue bankruptcy if you are able to pay your outstanding debts. However, it can be helpful if you are struggling to keep up with your bills and have debts that are equal to or greater than half of your monthly income, or if it would take you more than five years to pay off your debts through extreme austerity measures. Bankruptcy can be complicated and there is a chance that errors in the paperwork could result in your case being dismissed. This can be very damaging to your credit score and may leave you in a worse financial position than before you filed. An experienced bankruptcy attorney can ensure that the appropriate documents are filed correctly and that you receive all the benefits of a successful bankruptcy.
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HI 96793, United States
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