Will Bankruptcy Eliminate All Of My Debt?

If you are thinking about bankruptcy, you should understand the different chapters of bankruptcy available to determine which type is best for you. Determining which type of bankruptcy to file generally depends on the kind of debt you have. The two types of debts are secured and unsecured. Secured debt is tied to collateral or a specific asset, such as home loans and vehicle loans, while unsecured debt is mainly credit card debt.

A chapter 7 bankruptcy will eliminate almost all debt, including credit cards and wage garnishments. If you had a vehicle repossession, any deficiency debt the lender demands you pay is also dischargeable. A chapter 7 bankruptcy will not eliminate secured debt however unless you agree to surrender the property that secures the debt.

If you want to keep property securing a debt, a chapter 13 bankruptcy may be a better choice. A chapter 13 bankruptcy allows you to catch up missed payments on secured debt such as past due mortgage or car loan payments. These past due payments are paid over a period of three to five years. The payment is based on your disposable monthly income left over each month after you deduct your monthly household expenses.

Some debts cannot be discharged regardless of which chapter bankruptcy you file. Those debts include spousal maintenance (alimony), child support, student loans, some taxes, and any debt incurred through fraud. This is why it is important to know the difference between the types of bankruptcy.

Contact us today to schedule a free consultation to learn more about your bankruptcy options.