Will Bankruptcy eliminate all my debt?

When facing crushing financial pressures, declaring bankruptcy can provide a vital lifeline. However, it’s important to understand that bankruptcy does not eliminate all types of debts automatically. While many debts are dischargeable, others persist even after bankruptcy proceedings conclude.

We will explore common bankruptcy questions around the dischargeability of various debts. It also covers key next steps for considering bankruptcy as a debt relief option.

Can Bankruptcy Eliminate All My Debts?

The short answer – bankruptcy does not guarantee the complete elimination of debt across the board. Both Chapter 7 and Chapter 13 bankruptcy address and discharge different types of financial obligations to offer debt relief. However, some debts simply cannot be cleared regardless of the bankruptcy path taken. Others face stringent legal tests to qualify for potential discharge.

Deciding between Chapter 7 or Chapter 13 bankruptcy depends largely on one’s specific financial circumstances and assets. Each comes with distinct debt discharge implications. Experienced bankruptcy attorneys have the knowledge to take clients through the options comprehensively.

Debts Not Discharged in Bankruptcy Proceedings

Certain financial obligations are non-dischargeable, meaning they remain legally owed no matter the bankruptcy outcome. These debts include:

Secured Loans

Secured loans use collateral, usually property or assets, to guarantee repayment. Common examples are mortgages and auto loans. Filing for bankruptcy usually requires making a choice – either continuing loan payments or forfeiting the property. The debt itself persists.

Child Support and Spousal Maintenance

Legal maintenance obligations like child support and alimony cannot be discharged through any bankruptcy process. Outstanding amounts, repayment plans, wage garnishments – all remain fully binding even after bankruptcy closure.

Court-Ordered Restitution

If legal judgments require restitution payments to victims for losses caused by criminal acts, bankruptcy cannot override these. Restitution stemming from DUI incidents or other violations stay wholly owed by debtors declaring bankruptcy.

While bankruptcy does not discharge the debts above, it can halt related collection activities and garnishments. This offers temporary relief while undergoing proceedings. However, payments resume after bankruptcy closures.

Debts Difficult But Not Impossible to Discharge

Two common financial obligations face hurdles qualifying for bankruptcy discharge – student loans and income taxes owed. However, meeting stringent legal tests facilitates potential debt elimination. The onerous criteria include:

  • Student Loans: Most student loans only qualify for discharge by proving undue hardship or permanent disability preventing repayment. These exceptions are extremely rare. Absent meeting the difficult legal standards, student loans endure despite bankruptcy cases.
  • Income Taxes: Similarly, skirting income tax liabilities requires overcoming demanding criteria. This usually involves timing technicalities on when taxes were assessed versus bankruptcy filing. Like student loans, clearing income taxes through bankruptcy relies on niche circumstances.

Get a handle on what bankruptcy can and cannot do for your specific situation. Schedule a free initial consultation with Gale Angelo Johnson P.C.’s experienced bankruptcy attorneys today. Their legal expertise equips them to explain debt discharge potential based on your unique financials and life circumstances.

While bankruptcy falls short of eliminating all debt categorically, strategic filing paired with prudent planning facilitates significant financial turnarounds. Professional legal guidance is key to navigating bankruptcy successfully, contact us today!

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