Bankruptcy is an avenue to debt relief for many Americans, allowing them to get a fresh start and improve their financial well-being. Some people are under the impression that bankruptcy is a cure for all of their financial problems. This is not the case. There are certain things that filing for bankruptcy cannot do.
Bankruptcy will not rid you of secured creditors unless you pay at least part of what you owe. A secured creditor is one that has a security interest or a right to property that served as collateral for a debt. Bankruptcy might allow you to pay a portion of your debt instead of paying it in full and it may enable you to pay them back over time. But, if the debt is a secured one, the creditor will receive some form of payment.
Co-signors are not protected by bankruptcy. If someone co-signed on a loan, financing agreement or other debt for you, bankruptcy cannot protect them. They are not released from liability to pay back the debt because you filed for bankruptcy. They will most likely still be responsible for payment.
Bankruptcy cannot be used to relieve you from debts incurred after filing for bankruptcy. If you incur new debts after the date of your filing, you will be fully responsible for them.
Certain types of debts are not covered by bankruptcy. These are called non-dischargeable debts and include student loans, most tax obligations, domestic support obligations and judgments for personal injury or death due to driving while intoxicated. Even bankruptcy cannot relieve you of these debts, if you are currently responsible for them.
If you have been considering bankruptcy and believe that it is the answer to all of your financial problems, you should be cautious. There is no magic cure to all of your financial woes and one will certainly not be found in bankruptcy. But, if you qualify, bankruptcy can help you get back on your feet and give you some relief from the debts that are making your life miserable. Successfully filing for bankruptcy requires the advice of an experienced attorney. Contact a qualified bankruptcy attorney for a consultation today.