Filing for bankruptcy is often seen as a way to get a fresh financial start. It can provide relief from overwhelming debt, but many people wonder if it can truly eliminate all their financial obligations. The answer is not as straightforward as you might think. Understanding what bankruptcy can and cannot do is essential before deciding if it is the right solution for you.
What Bankruptcy Can Eliminate
When you file for bankruptcy, the primary goal is to discharge certain types of debt. The most common forms of bankruptcy, Chapter 7 and Chapter 13, offer different ways of handling your debts. Chapter 7 bankruptcy, often called liquidation bankruptcy, can eliminate unsecured debts like credit card balances, medical bills, and personal loans. Similarly, Chapter 13 bankruptcy, which involves a repayment plan, can help you restructure and reduce debts to make them more manageable. However, it is important to note that not all debts are eligible for discharge in bankruptcy.
What Bankruptcy Cannot Eliminate
Despite its ability to eliminate many types of debt, bankruptcy does not erase all financial obligations. Certain debts are considered non-dischargeable by law. This includes student loans, unless you can prove undue hardship, child support, alimony, and certain tax debts. Debts resulting from fraud or willful misconduct, such as fines or penalties from criminal actions, are also generally not dischargeable. It is crucial to consult with bankruptcy attorneys to understand the full scope of which debts can be eliminated in your specific case.
The Role of Bankruptcy Attorneys in Navigating Debt Relief
The process of filing for bankruptcy can be complicated, and not all debts are treated the same way. Bankruptcy attorneys can help guide you through the legal intricacies of your case, ensuring that you understand what can and cannot be discharged. They will review your financial situation, help determine the most appropriate form of bankruptcy, and provide representation in court if necessary. Their expertise is invaluable in ensuring that you get the maximum benefit from your bankruptcy filing while staying compliant with the law.
The Impact of Bankruptcy Filings in the U.S.
Filing for bankruptcy is not as rare as many might think. According to the United States Courts, annual bankruptcy filings totaled 452,990 by the end of 2023. This figure reflects a significant number of individuals and businesses seeking relief from overwhelming financial burdens. While bankruptcy can offer a fresh start, it’s important to carefully weigh the pros and cons before making such a major decision. A bankruptcy attorney can help you understand your options and the potential long-term effects on your credit and financial future.
While filing for bankruptcy can provide significant relief from many types of debt, it is not a blanket solution to all financial issues. Some debts, such as student loans and child support, will remain with you even after a bankruptcy discharge. Consulting with experienced bankruptcy attorneys can help you navigate the process and determine if bankruptcy is an appropriate solution for your specific financial situation. If you believe that bankruptcy is the right next step for you, contact The Bankruptcy Law Offices of James Schwitalla, P.A. today for expert assistance with every step of the filing process.