Filing for Bankruptcy
Bankruptcy laws were created by Congress to give individuals who are in financial trouble a fresh start from their burdensome debts. When you can’t keep up with your debts, you need a new opportunity to achieve your financial goals without being pressured and harassed by creditors. Bankruptcy is a process that can be used by both individuals and business to eliminate or assist in the repayment of debts, and should always be done with the assistance of an experienced bankruptcy attorney.
Bankruptcy and Discharging Debts
It is true that bankruptcy eliminates portions of your debt; however, some debts are not dischargeable even if you file for bankruptcy. Alimony, child support, and tax obligations are never dischargeable during bankruptcy at any time. These kinds of debts are considered non-dischargeable unsecured debts and they are held in high priority. Because they are non-dischargeable, once the bankruptcy process is completed, the debtor will still be on the hook to pay their remaining debt.
Types of Bankruptcy Filings
Bankruptcy has two main types, Chapter 7 and Chapter 13, commonly referred to as liquidation and reorganization. In a Chapter 7 case, your assets will be sold to pay for your debts. In a Chapter 13 case, you are made to pay off your debts via a payment plan made with the appointed bankruptcy trustee over the course of three to five years. Bankruptcy is complicated, which is why it is important to consider many factors if you are considering filing for bankruptcy. Here at Morgan & Morgan, we have more than 30 years of experience helping people with bankruptcy and debt relief.
Effects of Bankruptcy Filing
Filing for bankruptcy can produce several benefits for people who truly need the help and are being harassed by creditors. Of these many benefits there are three key benefits afforded to those who take advantage of bankruptcy laws:
- For one, if you file for Chapter 7 bankruptcy, your credit card debt will be completely wiped out because it is an unsecured debt, meaning there was no collateral taken by the creditor for the debt.
- Creditor collection activities and harassment comes to a screeching halt. Once you file for bankruptcy, creditors are no longer allowed to engage in collection activities to collect on a debt.
- Elimination of creditor liens. Lien avoidance can be taken advantage of if you file for Chapter 7 bankruptcy.
Although bankruptcy is a great way to get a fresh start, there are several misconceptions about bankruptcy that leads many individuals astray. Here are some common misconceptions about bankruptcy:
- Erase Student Loans. The only way that a student loan can be discharged in bankruptcy, is if a debtor can show that repaying the loan will cause undue hardship on their financial well-being, which is a very difficult threshold to meet. For this reason, student loans are rarely ever erased during bankruptcy.
- Filing for bankruptcy will prevent a secured creditor from repossessing your property. A lien on property can survive a bankruptcy filing. The debt may be eliminated, but if a creditor holds your property as collateral, it is considered to be a secured debt and the creditor is still entitled to take the property
- Eliminate tax debts, child support and alimony obligations. Child support, alimony and tax debts are all dischargeable unsecured debts. These debts always survive bankruptcy whether you have a Chapter 7 or Chapter 13 case.
Bankruptcy Lawyers Athens Ga
Bankruptcy is a complicated process that has multiple implications on the financial future of you and your family. Here at Morgan & Morgan, we have over 30 years of experience helping people with bankruptcy and debt relief. Contact us for a free consultation today.