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Bankruptcy laws were created by Congress to give individuals who are in financial trouble a fresh start from their burdensome debts.
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Filing for Bankruptcy: Choosing Between Chapter 7 and Chapter 13
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.
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.
Our Services
Additional Bankruptcy Reading
Bankruptcy law FAQ
Filing for Bankruptcy: Choosing Between Chapter 7 and Chapter 13
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:
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:
Get relief from credit card debt
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.
End collection harassment
Creditor collection activities and harassment come to a screeching halt. Once you file for bankruptcy, creditors are not longer allowed to engage in collection activities to collect on a debt.
Eliminate creditor liens
You can eliminate creditor liens with certain bankrupty filings. 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:
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:
Student loan debt
Student loans are not discharged in bankruptcy. 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 erased with bankruptcy.
Student loans are not discharged in bankruptcy. 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 erased with bankruptcy.
Student loan debt
Property lien exceptions
Filing for bankruptcy will may not prevent a secured creditor from repossessing your property. A lien on a 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.
Filing for bankruptcy will may not prevent a secured creditor from repossessing your property. A lien on a 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.
Property lien exceptions
Taxes, alimony child support
You cannot eliminate tax debts, child support or alimony obligations. Child support, alimony and payroll taxes are non-dischargeable unsecured debts. These debts always survive bankruptcy whether you have a Chapter 7 or Chapter 13 case.
You cannot eliminate tax debts, child support or alimony obligations. Child support, alimony and payroll taxes are non-dischargeable unsecured debts. These debts always survive bankruptcy whether you have a Chapter 7 or Chapter 13 case.
Taxes, alimony child support
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