Bankruptcy as an Option for Dealing With Debts
If you are crushed under an insurmountable amount of debt, it can get your heart-rate up. Resolving economical issues is best executed through an extensive approach.
One viable option that you might consider employing is bankruptcy.
Although you could also opt to consolidate debt, bankruptcy provides you with the opportunity for a fresh economical future, also known as a “fresh start”. Based on the kind of bankruptcy you file, your debts get reduced or eliminated, or you obtain extra time to pay them off.
Personal Bankruptcy–Not All Debts Are Dischargeable
However, when you declare personal bankruptcy, not all debts are dischargeable.
Liabilities that you cannot reduce or liquidate via a Chapter 13 bankruptcy case or a Chapter 7 bankruptcy case include child maintenance, court fines, alimony, and debts incurred as a result of drunk driving.
Liabilities such as back taxes and student loans normally do not qualify for bankruptcy debt relief but these debts may be dischargeable under certain circumstances.
The following are a few important things that you need to know:
Certain back taxes
If certain requirements are met, some taxes are dischargeable in bankruptcy. For details on these requirements, see my page on tax discharge in bankruptcy.
General loans and credit cards
You can discharge general loans as well as credit card bills in your bankruptcy filing. However, if you have used any fraudulent means to obtain loans, the creditor may successfully object to the discharge of that debt.
Federal student loans
There is new movement afoot in Congress to make it easier to discharge student loans in bankruptcy, but as of this time it is very difficult. The only way currently is if the debtor can prove “undue hardship” as that term is defined by case law. There are other non-bankruptcy means of dealing with student loans under certain circumstances.
For more on student loans visit Student Loans In Bankruptcy
Secured loans
Loans that are obtained with collateral such as a home or an automobile are dischargeable, but the lien remains against the property on which it is secured. Under certain circumstances liens can be removed or reduced. Discuss with your attorney what options might be available in your situation.
You may also discharge past due cable and utility bills, tuition, rent, and medical debts in bankruptcy. However, if you fail to pay your rent after bankruptcy you may be lawfully evicted by your landlord. Moreover, you may be required to pay an extra deposit to your utility companies if you do not stay current with your obligations, even after bankruptcy.
Need More Information?
For more information on which debts are dischargeable in bankruptcy, please visit debt discharge in bankruptcy
Author’s Bio: Martha Jackson loves to write financial articles and she is a contributory writer associated with the Debt Consolidation Care Community and has written several articles on debt consolidation, debt settlement and get out of debt for various financial websites. She holds her expertise in the Debt industry and has made significant contribution through her various articles.
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