What Personal Bankruptcy Can and Cannot Do
Personal bankruptcy can be a good option for people with specific needs, but it can only do so much. Sometimes people are under the impression that bankruptcy can provide more help than it truly does. While it can be disheartening, it is good to have a reality check. Here at Perez & Perez, we can help prepare our personal bankruptcy clients in Lafayette, IN for getting through the process smoothly.
First Things First
Before you begin thinking about bankruptcy, you should know that there are two types. The first is Chapter 7, which is intended for people with low income and large amounts of debt. Unfortunately, you are required to give up a great deal of your property in exchange for the removal of your debts. The second type is Chapter 13, which is the preferred option if you believe that you can pay some of your debts back. With this type of personal bankruptcy, our Lafayette, IN clients come to an agreement with three to five years of payments to repay the necessary debts and keep their property.
What Bankruptcy Can Do
While personal bankruptcy has limitations for our Lafayette, IN clients, it can still be helpful and impactful for many people. Here are just a few things that bankruptcy can do for you:
Stop harassment from creditors
Calling and letters can be irritating indicators of future trouble, but they can be dealt with in ways less permanent than bankruptcy. However, if a creditor is on the verge of foreclosing your mortgage or repossessing a necessary item like a car, filing bankruptcy may be a good option. Once you have filed bankruptcy, creditors are no longer allowed to contact you about unpaid debts or foreclose on your home in the case of Chapter 13.
Remove unsecured and credit card debts
Bankruptcy was created with the removal of unsecured (or dischargeable) debts in mind. With a few exceptions, most credit card debt is unsecured. This means that creditors related to it have no lien on any of your possessions, and therefore cannot repossess them.
What Bankruptcy Cannot Do
Bankruptcy has limitations, and it is important to know what they are before you file. If you think personal bankruptcy might be for you, then contact a Lafayette, IN attorney like Perez & Perez. Here are a few things you should know bankruptcy cannot do before you call:
Remove requirements for child support
Child support debts and obligations cannot be eliminated by bankruptcy. In Chapter 7, you still have the full debt to pay. In Chapter 13, your plan for payment will have to include repaying what you owe in child support in full.
Eliminate student loan debt
The only way for student loan debt to be removed during bankruptcy is by proving undue hardship, which is extremely difficult to do. It requires you to prove an inability to pay now and in the future. If that cannot be done, student loan debt will remain the same through bankruptcy.
Bankruptcy has many more advantages and limitations, but talking to a personal bankruptcy attorney like at Perez & Perez in Lafayette, IN is the best way to decide if bankruptcy will work for you. Contact us today to schedule an appointment.