If you’re considering filing for bankruptcy, you may believe that it will be the thing that eliminates all debt. Unfortunately, this isn’t always the case. While the process of filing will eliminate much of your debt and force an automatic stay order against creditors from harassing you or squeezing money out of you through wage garnishments or lawsuits, there is some debt that bankruptcy can’t touch, as a lawyer like a foreclosure lawyer Hartford, CT from a law firm like CT Bankruptcy Attorneys, can explain. Keep reading to find out what types of debt bankruptcy can and can’t touch.
Bankruptcy can eliminate most unsecured debt you’ve accumulated, such as unsecured credit card debt, medical bills, and personal loans. The only exception is your student loan, though there is some exception to this. If it has been five years since your first student loan payment and you can prove that paying the loan would cause undue hardship, the court may allow you to discharge the loan with the rest of your debt.
While it is true that bankruptcy can eliminate secured debts, the result often means you’ll have to forfeit the asset back to the company you purchased it from. Secured debt often includes your mortgage, auto loan, or even financed purchases such as furniture.
Foreclosure, Repossession, and Eviction
Your bankruptcy’s automatic stay will press pause on any foreclosure, repossession, or eviction still pending. But don’t expect to keep your home or assets once the stay order is over. While filing for Chapter 7 won’t allow you to eliminate these debts, you may be able to keep your home and assets with Chapter 13 via a debt repayment plan.
Child Support and Alimony
If you’re looking to get out of paying child support or alimony via filing for bankruptcy, think again. Domestic support obligations are not often dischargeable through either Chapter 7 or Chapter 13 bankruptcy. The circumstances that would allow someone to discharge this debt are very specific and uncommon. Contacting a foreclosure lawyer can help you decide if you can eliminate your child support and alimony debt.
Other Nondischargeable Debts
While some debt has specific circumstances that would allow you to discharge it, others are completely unable to be discharged, even if it would create an undue hardship. This includes debt you forget to include on your bankruptcy paperwork, debts for personal injury if you were intoxicated while driving, and penalties given as punishment, such as traffic tickets. You may also be unable to discharge the fraud-related debt if the creditor files an adversary proceeding.
Bankruptcy is a complicated process and it’s important to get advice about how best to eliminate all of the debt you can while still keeping your quality of life. Call a foreclosure lawyer today to see how they can help.