Bankruptcy can eliminate a great deal of debt but not all of it, before you file it is always a good idea to talk to a bankruptcy lawyer in Salt Lake City to see what debts will be eliminated and which debts will remain. Credit card debt which is usually an issue can be wiped out when filing either Chapter 7 or Chapter 13 although there are debts that will stay with you, these include child support payments, taxes in most cases, alimony, student loans as well as secured debt.
What bankruptcy can do:
Unsecured debt such as credit cards: When you file for bankruptcy you will almost certainly be able to wipe out all credit card debt. Unless your credit card is a special secured card all the debt accumulated on your credit cards is considered as unsecured, it is unsecured debt that bankruptcy is designed to eliminate. In almost all cases, unsecured debt will be wiped out; this includes medical and hospital bills as well.
There are differences in the rules that apply to Chapter 7 and Chapter 13. If your bankruptcy lawyer in Salt Lake City suggests that you file for Chapter 13 you may have to repay a percentage of your accumulated unsecured debt but once the court agreed repayment plan has been satisfied and remaining unsecured debt is wiped out.
Put an end to collection efforts and harassment: Prior to filing for bankruptcy your creditors no doubt are calling you and banging on your door all hours of the night and day, bankruptcy will put an end to this.
What bankruptcy can’t do:
Prevent repossession of a secured property: Bankruptcy eliminates debt, it does not eliminate liens. If part of your debt is secured the creditor has the right to reposes the property although the act of declaring bankruptcy will eliminate the debt.
Child support and alimony : The obligations that you have with regards to child support and alimony survive bankruptcy; you are obliged to continue paying these obligations in full.
Student loans : Student loans cannot be discharged unless you can claim and prove that repaying these debts will cause you to suffer undue hardship, this is very difficult to do. You must prove to the court that you cannot pay the loan now and there is little or no likelihood that you will be able to pay them in the future.
Tax debt : You may be able to get relief on old unpaid tax debt but only a bankruptcy lawyer in Salt Lake City can help as there are many requirements that must be met for this debt to be discharged.
It is important that you fully understand the ramifications of Chapters 7 and 13, they are different and only your lawyer can point you in the right direction based on your circumstances.
