Will Bankruptcy Wipe Out All of My Personal Debts?

Posted on in Personal Bankruptcy

Tinley Park bankruptcy attorney, personal debtsThe United States is a notoriously consumeristic society. Having good credit is a necessity to buy a home and a reliable vehicle. Credit must be built, often through the usage of credit cards and the ability to repay the credit card debt.

Sometimes we accumulate debt and get in too far over our head. Other times, a major unforeseen life event occurs, one we are unprepared to handle financially. When this happens, there is a process known as bankruptcy to help struggling individuals and families. When considering bankruptcy, the first question on many minds is, “will it get rid of all of my debt?"

What is Bankruptcy?

Bankruptcy is a federally approved process in which an individual or a company can reduce their debt. Those who are authorized to partake in the process may have debts written off or repaid under a new agreement. The method used depends directly on the type of bankruptcy approved. The most typical forms of the process are Chapter 11 bankruptcy for businesses or Chapter 7 or 13 bankruptcy for private consumers, although others are available under appropriate circumstances. Meanwhile, as the process is underway, lawsuits and other collection attempts cease.

Will My Debts Be Free-and-Clear?

If the question is if the bankruptcy resets your credit, enabling you to begin as though the debt never occurred, the answer is “no.” This system allows those meeting eligibility requirements to rid themselves of some, but not all debt. Financial obligations that do not typically qualify to be wiped clean include child support, alimony, taxes, student loans, and secured debt. Although they may not wipe clean, some may be eligible for a restructured payment plan. The most predominantly discharged liabilities include the following:

  • Unsecured debts;
  • Credit cards; and
  • Hospital bills.

Why Would You Choose Not to File?

What prevents consumers from racking up amounts on credit cards that are not repayable, filing for bankruptcy, and doing it again? It is illegal for employers to discriminate against those filing for bankruptcy and many things, such as your house, are potentially exempt from property seizure as you progress. However, negatives do exist preventing everyone from jumping on with this plan, including:

  • Not all debts are eligible;
  • Some property is non-exempt from the seizure ban, including a house or car in particular circumstances; and
  • Bankruptcy remains on credit reports for ten years, preventing many loans and increasing interest rates.

Is Bankruptcy Right for Me?

You may have a relative or a friend who confided in you about going through bankruptcy and wiped away all of his or her stress and noted how it was the best decision he or she ever made. That is excellent news. However, it is not the right solution for each case. Your financial situation is as unique as your thumbprint, and it requires the assistance of a trained professional to analyze each detail and weigh the options. If you would like help determining if bankruptcy is the best solution for you or your business, speak to a Tinley Park, IL bankruptcy attorney. Contact the Law Offices of Eric G. Zelazny today by calling 708-888-2299 to schedule your risk-free first consultation.

Source:

http://www.ilnb.uscourts.gov/

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