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If you’re overwhelmed by debt, you might be giving serious consideration to filing for bankruptcy. While bankruptcy can wipe out a lot of debt and give you a financial fresh start, it doesn’t eliminate all of your obligations. It is important to understand that bankruptcy won’t necessarily take care of all your problems.
Here are some of the things bankruptcy can’t do.
Stop a Secured Creditor from Repossessing Property
Bankruptcy doesn’t eliminate liens. If your property is under a lien, the lender can repossess it, sell it at an auction and apply the proceeds to the loan balance. While bankruptcy can remove your responsibility to pay the debt, it can’t remove the lien. For instance, you may be able to eliminate your obligation to pay your mortgage, but the lender’s lien will remain on the property.
Wipe Out Student Loans
With college costs continuing to rise, many people have high student loan balances and may struggle to pay it off. However, student loans can’t be wiped out in bankruptcy, unless you can show that paying off the loan would cause you undue hardship. Unfortunately, this is very difficult to prove.
Eliminate Child Support and Alimony Payments
If a judge has ordered you to make child support or alimony payments, you will continue to owe these debts. Bankruptcy can’t eliminate these debts under any circumstances.
Get Rid of Tax Debts
It is also very difficult to eliminate tax debts in bankruptcy. However, if you have tax debts that are several years old, it may be possible to discharge them.
Eliminate Debt Related to Fraud
In most cases, debt related to fraud can’t be discharged in bankruptcy. For instance, if you lied on a credit application, you probably won’t be able to get rid of the debt in bankruptcy.
Consulting With a Bankruptcy Lawyer
Bankruptcy law can be incredibly complex and difficult for the average person to understand. That is why it is in your best interest to discuss your case with an experienced bankruptcy lawyer. He or she will assess your financial situation and determine if bankruptcy is the right option or not. A bankruptcy lawyer can also help you decide between Chapter 7 and Chapter 13. For example, if your goal is to keep your home, he or she will likely recommend Chapter 13 bankruptcy.
Contact a bankruptcy lawyer today, to schedule a consultation.