Bankruptcy Help You Can Count On | Debt Help | Spergel (2024)

FAQs

Bankruptcy Help You Can Count On | Debt Help | Spergel? ›

You may be wondering if filing bankruptcy is the right form of debt relief for you, and our Licensed Insolvency Trustees can help you to make this decision. There are a number of key advantages of filing bankruptcy over other forms of debt relief: All unsecured debts are eliminated.

Filing for Chapter 7 bankruptcy eliminates credit card debt, medical bills and unsecured loans; however, there are some debts that cannot be discharged. Those debts include child support, spousal support obligations, student loans, judgments for damages resulting from drunk driving accidents, and most unpaid taxes.

One of the primary purposes of bankruptcy is to discharge certain debts to give an honest individual debtor a "fresh start." The debtor has no liability for discharged debts. In a chapter 7 case, however, a discharge is only available to individual debtors, not to partnerships or corporations.

Clear Your Debt

Chapter 7 bankruptcy completely wipes clean and discharges eligible unsecured debts. You will find yourself either without debt entirely or with a much more manageable set of loans left and significantly more disposable income to catch up on any overdue payments.

What does life after bankruptcy look like? You'll have to endure hardships — from cash flow management to establishing good credit and rebuilding your credit profile — but it's possible to financially recover from bankruptcy and give yourself a fresh start.

During bankruptcy, it's important to distinguish between necessary expenses and luxurious purchases. While you are allowed to spend money on essential items such as housing, utilities, food, and transportation, extravagant expenses might be scrutinized by the bankruptcy court.

“Chapter 7 applications get denied more often than people think,” Derek Jacques, of The Mitten Law Firm, in Michigan, said. “In my experience, about 15% don't even get approved. From there, they can be dismissed before the process is completed for a lot of reasons.”

Chapter 7 bankruptcy is a type of bankruptcy filing commonly referred to as liquidation because it involves selling the debtor's assets in bankruptcy. Assets, like real estate, vehicles, and business-related property, are included in a Chapter 7 filing.

Not all debts are discharged. The debts discharged vary under each chapter of the Bankruptcy Code. Section 523(a) of the Code specifically excepts various categories of debts from the discharge granted to individual debtors. Therefore, the debtor must still repay those debts after bankruptcy.

Job loss, medical expenses, and escalating mortgage payments are among the common reasons people file for bankruptcy. Overspending can also contribute to a situation that forces someone to file for bankruptcy.

Does bankruptcy help you or hurt you? ›

Bankruptcy can possibly give your finances a clean slate, but there are negative consequences that can affect your financial and credit situation for years. Knowing what to expect can help you determine whether it's the right move for you.

Secured claims are paid first, then the expenses of administering the bankruptcy, then priority unsecured claims, which may include all or a portion of employee wage and benefit claims and, finally, general unsecured claims. The administration of a Chapter 7 case can take many months or even years to complete.

The Bottom Line

Bankruptcy can limit or block your ability to borrow money and may even lead to loss of property, but its effects will fade over time.

You Can Keep Property You'd Lose in Chapter 7

However, there's a catch. You must pay its value through the repayment plan. So, if you have nonexempt property you can't bear to part with and can afford to pay to keep it, Chapter 13 bankruptcy might be the better choice.

Exempted property in a bankruptcy can include the car you need to drive to work and to the store for food. It can include the tools you need to do your job. It can include the house in which you live, and the furniture and appliances and other household goods that make the house your home.

No one loses all of their property when filing for bankruptcy. Find out if you can keep your house, car, and other assets in bankruptcy. Don't worry—you won't lose everything in bankruptcy. Most people can keep household furnishings, a retirement account, and some equity in a house and car in bankruptcy.

Debts not discharged in chapter 13 include certain long term obligations (such as a home mortgage), debts for alimony or child support, certain taxes, debts for most government funded or guaranteed educational loans or benefit overpayments, debts arising from death or personal injury caused by driving while intoxicated ...