What Can Bankruptcy Not do?

What Can Bankruptcy Not do?

Many of us have dealt with serious financial issues. Perhaps we could not pay the rent or mortgage. Some people have gone without anything to eat for days. When the bills pile up, and our income just cannot keep up, we may be tempted to file for bankruptcy.  

Bankruptcy offers many advantages, but it is something that should not be taken lightly. People who go through the bankruptcy process will be forced to sell their possessions. They will have to give up their credit cards. Their credit score will take a big hit.

For those who have lost their jobs and cannot pay their mortgages, loans, medical bills, and other expenses, bankruptcy can be the right choice. It can stop foreclosure, wipe out debts and essentially let you start over with a clean slate.

Bankruptcy is not a financial cure, however. There are some things that bankruptcy cannot help with.

Eliminate Liens

While bankruptcy will eliminate unsecured debt (such as credit card debt and medical bills), it will not eliminate liens, which you likely have on your house or vehicle. Bankruptcy can eliminate your obligation to pay the debt, but if you do not pay your auto loan or mortgage, your car and home can be repossessed and sold at an auction. The only way you can keep these items is to continue paying on the debt.

Eliminate Student Loans

For the most part, bankruptcy will not eliminate a student loan debt unless you can prove financial hardship, which is not easy. You must prove that you currently cannot afford to pay your loan and feel you will not be able to in the future. This is a tough standard to meet.

Eliminate Child Support and Alimony

Child support and alimony are court-ordered debts that do not go away in bankruptcy. You will be forced to pay these in full. If you file for Chapter 13 bankruptcy, these debts will be included in your payment plan.

Protect Co-Signers

Bankruptcy protection does not extend to co-signers. If you have a parent or other family member on an auto loan, for example, they will still be responsible for paying all or part of the loan.

Eliminate Nondischargeable Debts

There are several other types of debts that cannot be discharged. For example, debts not listed in your bankruptcy filing are not dischargeable. If you file for bankruptcy and still manage to rack up more debt, you are on your own. Bankruptcy protection applies only to charges that you accrued before the filing. You will be responsible for any subsequent charges.

If you were driving drunk and caused injury or death to another person, you are still responsible for any debts incurred by that action. Also, fines and traffic tickets still must be paid.

Discuss Your Options With a Merrillville Bankruptcy Lawyer

Bankruptcy can help certain individuals achieve financial freedom, but it is not the right choice for everyone. It can help with some but not all debts. If you are drowning in debt, contact the Merrillville bankruptcy attorneys at Whitten & Whitten to explore your options. Schedule a free consultation by calling (219) 756-0555.