Knowing Whether Bankruptcy Can Wipe Out Particular Debts
Bankruptcy is a legal process that can help individuals and businesses who are struggling with debt. It is designed to provide relief from the burden of debt, allowing people to start fresh financially. Bankruptcy can be a daunting topic for many people, but it can also be a lifesaver for those who are struggling with overwhelming debt. It’s important to understand what bankruptcy can and cannot do when it comes to wiping out particular debts.
Knowing whether particular debts can be wiped out in a bankruptcy filing is an important part of understanding how the process works and what kind of relief it can provide for individuals struggling with debt. By understanding which debts are eligible for discharge through a bankruptcy filing, individuals can make more informed decisions about their financial future and get back on track financially sooner rather than later.
When you file for bankruptcy, the court will review your financial situation and determine which debts can be discharged. Generally speaking, most unsecured debts such as credit card debt, medical bills, personal loans, and certain types of taxes can be discharged in bankruptcy.
Secured debts, such as mortgages or car loans, cannot be wiped out in Chapter 7 bankruptcy. This means that if you have a mortgage or car loan, you will still be responsible for making payments on those debts even after filing for bankruptcy. However, if you surrender the property (such as giving up your car to the lender), any remaining balance on the debt may be discharged. Additionally, some types of taxes may not be dischargeable in bankruptcy depending on the type of tax and when it was incurred.
Student loans are another type of debt that cannot typically be discharged in bankruptcy. The only exception is if you can prove that repaying your student loans would cause an undue hardship on you or your family. In order to make this determination, the court will look at several factors including your current income level and job prospects.
In addition to these types of debts being non-dischargeable in bankruptcy, there are also certain types of creditors who may not have their claims wiped out by a bankruptcy filing. These include government entities like the IRS or state taxing authorities; child support obligations; alimony payments; fines imposed by courts; and certain types of fraud judgments against you. These debts usually must be repaid, either through a Chapter 13 repayment plan or outside of bankruptcy.
Tax debts can be a bit more complicated. Some tax debts may be dischargeable in bankruptcy, but others may not. Generally, income tax debts that are more than three years old and meet certain other criteria may be dischargeable. However, other types of tax debts (such as payroll taxes) cannot be discharged in bankruptcy.
Bankruptcy can be a powerful tool for those who are struggling with overwhelming debt. However, it’s important to understand that filing for bankruptcy does not mean all of your debts will automatically be wiped out – only certain ones will qualify for discharge depending on the type of debt and creditor involved. Therefore it’s important to speak with an experienced attorney before filing for bankruptcy so they can review your financial situation and advise you on which debts may qualify for discharge under the law. Consulting with a bankruptcy or divorce attorney in Decatur is the best way to determine your options and make an informed decision about your financial future.