People don’t just wake up one day and decide to file for bankruptcy. It usually takes years of accumulating debt that, no matter how hard you try, you can’t pay off. Fortunately, declaring bankruptcy can provide you with a clean slate so you’re no longer being burdened by piles of bills and harassing creditors.
However, just because you file for bankruptcy doesn’t always mean that you’re completely debt-free. Read on to learn more about the different types of bankruptcy options you have and which debts can’t be discharged when you file.
Choosing the Right Type of Bankruptcy
When you’re considering filing for bankruptcy, there are a couple of different options you can choose from. Often, your bankruptcy will fall into one of the following categories:
- Chapter 13 – If you’re looking into Chapter 13, it’s probably because you want to repay your creditors and retain possession of your belongings. Here, you’ll develop a repayment plan that will allow you to repay your debts within three to five years.
- Chapter 11 – In a Chapter 11 declaration, you’ll follow nearly the exact same steps as you would in a Chapter 13 except that those filing Chapter 11 are typically business owners who want to remain open while they repay their debts.
- Chapter 7 – When people think of bankruptcy, they typically think of selling everything they own to become debt-free. This is partly true; if you file for Chapter 7, all of your assets will be liquidated. The funds raised from that sale can repay your creditors. Once you’ve sold your assets, your remaining debts will be discharged.
If you aren’t sure which type of bankruptcy applies to your case, your attorney can discuss your debts and hopes for the future with you to determine the best option. Once you declare bankruptcy, your creditors will be required to cease all attempts to collect your debts so you can focus on moving forward with your bankruptcy plan.
Debts That Cannot Be Discharged When You Declare Bankruptcy
It’s easy to assume that every debt you have will be discharged once you complete your bankruptcy plan. This is a misconception that can cost you dearly if you don’t plan for certain remaining debts.
For example, you will not be able to discharge child support or alimony payments, student loans, tax debts, and any fines or debts you incurred due to a crime you committed, or if you caused an injury or death due to drunk driving.
A special note regarding student loan discharge: It is very common for individuals to believe that they cannot discharge their student loans when they file for bankruptcy.
Fortunately, this isn’t the case. If you are hoping to get your student loans erased, whether they are federal loans or private, you’ll need a knowledgeably debt relief attorney to establish your undue financial hardship. At that point, it might be possible to get your student loan debt discharged.
Consult a Terre Haute Bankruptcy Lawyer
If you have further questions about bankruptcy, or if you are struggling under a mountain of student loan debt and need help getting them discharged, reach out to a qualified Terre Haute bankruptcy lawyer at Rowdy G. Williams Law Firm. Simply give our office a call at 1-812-232-7400 or complete the quick contact form below to schedule your obligation-free consultation today.