What Bankruptcy Can and Cannot Do, Part 2

December 16

In our previous article, you could find out what can be accomplished by filing for bankruptcy. If you are considering filing for bankruptcy, you should know that, though bankruptcy is a powerful remedy, there are things that it cannot help you with. Bankruptcy is a complex area of law which requires the assistance of a knowledgeable and experienced bankruptcy attorney Carlsbad residents rely on.

Bankruptcy can provide relief if you are unable to repay your debts but it cannot cure your every financial problem.

 

Eliminate all debt

For the most part, you will be able to get rid of credit card debt if you file for Chapter 7 or Chapter 13 bankruptcy, but be aware that there are types of debt that cannot be wiped out.  Certain debts are eligible for discharge, such as medical bills, personal loans, and civil court judgments. These are unsecured debts, which bankruptcy can eliminate.

Filing bankruptcy won’t be able to help you with debts you forget to list, as well as those for personal injury or death caused by intoxicated driving. Neither Chapter 7 nor Chapter 13 can help you with certain taxes, debts to government agencies for penalties and fines, as well as debts for spousal or child support or alimony.

Keep in mind that secured debt cannot be discharged even if you file for Chapter 7 bankruptcy. As long as you continue to make regular payments to the lender, you will be able to keep your property.

Eliminate tax debt

Sometimes, wiping out tax debt is possible for older debts for unpaid income taxes. There are numerous requirements to be met, so it’s best to consult an experienced bankruptcy attorney in Carlsbad or another are you live.

Until you do, you should know that Chapter 7 bankruptcy usually doesn’t allow debtors to discharge state or federal income tax debts. You may be able to wipe out some of this debt in case you file for Chapter 13 bankruptcy but it would depend on the type, amount and timing of the debt.

Eliminate support obligations

If you are paying child support or alimony, keep in mind that these payments typically cannot be discharged in bankruptcy. Even though you file a motion to modify the order and the judge grants it, your child support or spousal support payments will be reduced but not eliminated. You are still going to be responsible for the full amount.

In Chapter 13 bankruptcy, the debtor is usually required to show how back payments will be paid in full through his repayment plan. In case of spousal support, there are exceptions to the rule if a third party becomes involved in the alimony arrangements or in case of incorrect alimony classification. Arrange a consultation with a skilled Carlsbad bankruptcy attorney to discuss your options.

Eliminate student loan debt

Given that they are considered non-priority unsecured debt, most student loans cannot be discharged when filing for bankruptcy. However, there are some exceptions but certain conditions have to be met first.

In most jurisdictions, the debtor has to prove that repaying the loan would cause undue hardship. Though this may seem easy to achieve, the discharge of your student loan in bankruptcy is a notoriously difficult process.

The debtor has to show an extreme hardship, such as when the person is permanently disabled and will never work again. For this reason, student loans are usually considered nondischargeable debts.

For legal assistance, consult a bankruptcy attorney Carlsbad

Bankruptcy is a complex legal topic that you should discuss with an experienced bankruptcy attorney Carlsbad debtors trust. Contact Bankruptcy Lawyers Chang & Diamond, APC and schedule a free initial consultation at (619) 312-4900 or (800) 718-8118.

We will help you realize what you can and cannot accomplish through bankruptcy, explain the process of filing for bankruptcy, and provide specific information that could help your case.