Bankruptcy is able to help millions of people, but it can’t do everything for you. If you believe it is the way to solve all of your financial problems, you could be mistaken.
In fact, some loans, such as student loans, can’t be filed under bankruptcy.
More so, some people can’t file bankruptcy, such as those that make too much money or those that have filed in the recent past.
There are many myths about filing that you should know about before you meet with an attorney to discuss your case.
Bankruptcy: It Does Help
Bankruptcy does have some benefits
* It can help eliminate unsecured debts you owe, like credit cards
* It can help to stop creditors from calling your home and stop collection activities
* It can help eliminate some liens, such as those creditors place on your home
* It can give you a fresh start at financial life
* It can help stop foreclosure on your home, when filing Chapter 13
If you are in these situations, talk to an attorney to find out if bankruptcy is for you.
In many cases, it is the ideal method for getting that fresh start.
Bankruptcy: What It Can’t Do
There are various aspects of filing bankruptcy that are not as good, though. In fact, there are many thing bankruptcy simply can not do for you.
It can’t save assets you have from creditors repossessing them.
For example, secured debts like your mortgage can not be stopped if you stop repaying those loans. If you own a vehicle that is behind in payments, you’ll need to get back on track with those payments or the loan holder can repossess the asset.
It can’t stop child support or alimony payments you may have. If you are paying child support or alimony, you will not be able to discharge these debts. These debts do not change in any fashion.
Even if you were to file Chapter 13, the restructuring of your debt would still need to include help for these payments.
It can’t stop student loan payments. You will still need to meet the obligations of your student loans.
There are some loans that may be affected, but this is uncommon. The only situation that will allow discharge of student loans is when you can prove to a court of law that repaying the loan will cause you “Undue hardship.”
It can’t stop you from repaying tax debts. If you the state or federal government, it will not be able to help you to eliminate these debts.
In some rare cases, there are other options available, which your attorney can help you see if you qualify for.
When looking at bankruptcy home loans; it pays to do a little research first as a good way to move forward.
It can’t establish new credit for you. You should never use bankruptcy to be a way to get out of old debt and into good debt.
In most situations, you’ll find it difficult to have any credit cards at all, as well as some mortgages, for several years after bankruptcy. In fact, the bankruptcy is a public record which will stay on your credit report for ten years.
If you are filing Chapter 13 bankruptcy, some of these requirements can be avoided. For example, filing Chapter 13 can stop repossession of some of your assets or foreclosure on your home, but only long enough for you to begin repayments as outlined in the repayment plan.
Talk to your attorney about your bankruptcy case and how effective it will be at helping you establish a new financial lease on life.
For many, it may prove to be the ideal method of going forward, for others, problems will still exist.