What Bankruptcy Can and Cannot Do, Part 2

bankruptcy attorney CarlsbadIn 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.

What Bankruptcy Can and Cannot Do, Part 1

bankruptcy lawyer san diegoBankruptcy is a powerful remedy to shield debtors from unfair debt collection and offer them debt relief. However, it doesn’t solve all financial problems. For example, in some situations, Chapter 13 can help, while Chapter 7 cannot. Before you file for bankruptcy, discuss your debts and possibilities with a bankruptcy lawyer San Diego residents trust. In the meantime, read on to find out what you can accomplish through bankruptcy.

What Bankruptcy Can Do

Here are some of the things that filing for bankruptcy can do:

Eliminate unsecured debts. Bankruptcy can wipe out unsecured debt such as personal loans, credit card debt and medical bills. Unless you have a special, secured credit card and the creditor doesn’t have a lien on your property, the creditor doesn’t have the right to any of your items if you fail to pay the debt.

Chapter 7 has a greater capacity to eliminate your unsecured debt than Chapter 13. When a debtor files Chapter 13 bankruptcy, they agree on a debt repayment plan. Though secured debts have priority, the debtor will usually pay back a portion of their unsecured debts, as well.

Wipe out certain types of liens. A lien is a creditor’s conditional right to retain possession of a debtor’s property. Bankruptcy cannot get rid of most creditor liens but judgment liens can qualify for “avoidance” if they meet certain conditions.

A judicial lien is a lien that resulted from a judgment entered against you in a legal procedure. Chapter 7 can allow you to have these judgments removed in the court proceedings. If you decide on Chapter 13, you could include the judgment in a repayment plan, ending in a discharge of the lien. Contact your San Diego bankruptcy lawyer, who will assess if the lien can be handled in the court process.

Reduce secured debt. Chapter 7 bankruptcy cannot help you with secured debt. If you want to keep the property and its market value is less than what you owe, Chapter 13 may allow you to lower your secured debt. You will then pay off the reduced amount through your repayment plan.

There are limitations to secured debt reduction when the property is acquired within a certain time period near the filing. The time limitation depends on the type of loan the debtor wants to cram down. Nevertheless, Chapter 13 is a powerful remedy that can provide huge savings.

Keep certain assets. In a Chapter 7 filing, the debtor can keep certain assets, which are called exempt property. Property that is free from liquidation includes items that are necessary for living and working.

Chapter 13 bankruptcy can prevent a foreclosure and allows you to keep all of your property, including non-exempt assets. In this case, the debtor agrees to make a monthly payment and follow through their repayment plan. The plan can last between three and five years, which is determined by the debtor’s family income.

Stop creditor harassment and collection attempts. Filing bankruptcy can prevent unsecured creditors from taking further action to collect their debt. The Fair Debt Collection Practices Act (FDCPA) shields debtors from unfair or abusive tactics and practices by debt collectors.

In case you are experiencing creditor harassment, consult an experienced bankruptcy lawyer San Diego, who will explain your rights and make sure that your debts are collected in accordance with the law.

Consult a bankruptcy lawyer San Diego

Whether you are considering bankruptcy or are in the process, having a knowledgeable bankruptcy lawyer in San Diego by your side can save you time and money, ensuring that your bankruptcy filing and the ensuing process go smoothly.

Reach out to Chang & Diamond, APC for a free consultation at (619) 312-4900 or (800) 718-8118. Together we will go through your options so that you can start fresh the best way you can!