If you are in a stressful financial situation and have incurred serious debt, bankruptcy is an option that can help right your ship. It has been proven to help people get their finances in order and can even alleviate some of the immediate problems you might have been facing as a result of your debt. But bankruptcy is not perfect and there are plenty of things filing for bankruptcy will not exempt you from. It is important for you to be aware of what filing for bankruptcy can and cannot do for you.
What Can Bankruptcy Do?
The two main types of bankruptcy are Chapter 7 and Chapter 13 bankruptcy. They each have their own benefits and can sometimes treat debt and property differently. An experienced bankruptcy attorney can help you figure out which is best for you.
When you do choose to file, you can expect the following to happen:
- Stop creditor harassment and collection activities — when you file, the court will activate an automatic stay. This will stop most creditor calls, lawsuits, and wage garnishments. It can even temporarily stop a foreclosure, repossession or eviction. Unfortunately, creditors will still be able to collect support payments and criminal cases will still proceed.
- Wipe-out unsecured credit card debt — filing for bankruptcy can wipe out unsecured credit card debt as well as medical bills, personal loans, overdue utility payments and even gym contracts. Chapter 7 bankruptcy takes an average of three or four months to complete while Chapter 13 will mean you will have to pay back a portion of your unsecured debt in your three-to-five year repayment plan. Any remaining unsecured debt after that will discharged.
- Wipe-out secured debt — in the event you cannot afford a payment on something like a mortgage or car payment you can wipe out the debt in bankruptcy, but there is a catch. You will not be able to keep the item securing payment of the loan.
What Can’t Bankruptcy Do?
As mentioned earlier, filing for bankruptcy does not fix all of your debt problems. When you file, you can expect to still deal with the following:
- Child support and alimony obligations — these survive bankruptcy. You will have to continue owing these debts in full. In Chapter 13 bankruptcy you will end up paying these in full through your repayment plan.
- Student loans — student loans will remain except under very rare circumstances. If you can show that repaying the loan would give you “undue hardship” they might be discharged. It is a tough standard to meet.
- Liens on properties you cannot afford — bankruptcy may eliminate debts but it does not rid of liens. This means that a secured creditor can still foreclose or repossess property they have a lien on if you cannot afford to pay. The lien stays on the property unless the debt gets paid.
- Non-dischargeable debts — you will still have to deal with debts you forgot to list in your bankruptcy, fines, and penalties imposed as punishment (traffic tickets, criminal restitution), and debt related to personal injury or death due to intoxicated driving.
Contact Experienced Bankruptcy Attorney in Cherry Hill, NJ
Clearly, a lot goes into filing for bankruptcy, regardless of which type you choose. It can be overwhelming to attempt the process on your own, which is why an experienced bankruptcy attorney will work in your favor. In Cherry Hill, New Jersey, turn to the Law Office of Joel R. Spivack for your bankruptcy needs. Mr. Spivack is well-versed in bankruptcy law and understands how it can impact your life for the better. Do not wait another second incurring more debt. Contact him today by filling out the online form.
The articles on this blog are for informative purposes only and are no substitute for legal advice or an attorney-client relationship. If you are seeking legal advice, please contact our law firm directly.