Bankruptcy Myths – Part Three: All of my Debts Will Be Relieved
I’ve worked with hundreds of clients who have filed bankruptcy in Flint, MI, Detroit, MI and Bay City, Michigan. In each of those cases, there have been several reoccurring concerns that I have addressed. Over the next few weeks, this blog will discuss common myths about filing for bankruptcy – such as losing all of your assets and not being able to get credit again. Continue reading to discover what really happens if you file for bankruptcy.
Both Chapter 7 and 13 Bankruptcy will provide you relief from most forms of debt, but there are some exceptions. The court may deny your discharge if you fail to follow bankruptcy’s procedures and court rules. This means that you cannot discharge even your otherwise dischargeable debt. It is very important that you attend all required hearing and produce all of the requested information.
In addition, the Bankruptcy Code lists 19 categories of nondischargeable debt. Congress has determined that these debts are not dischargeable for public policy reasons. For most of these categories, the debt is outright nondischargeable, unless extraordinary circumstances exist. That means that the creditor can continue to attempt to collect the debt even after you receive a discharge.
Debts not discharged in bankruptcy:
Debts that you are personally responsible for are not discharged in bankruptcy. Examples:
- Recent taxes (less than 3 years old)
- Child or family support
- Court fines and penalties (including criminal restitution)
- Debts that are a result of fraud
In addition, student loans are typically not forgiven. It can happen in cases of extreme hardship, but it is rare.
Generally, you can discharge debts from personal loans, credit cards and medical bills, and other general unsecured debts. If you choose to keep your house or your car, you will continue to be liable to repay those debts.
This post is part of a multi-part series. For more information on bankruptcy myths, start at the beginning: Bankruptcy Myths – Part One: I’ll Lose Everything! and Bankruptcy Myths – Part Two: Ill Never Be Able to Get Credit Again.