What a Bankruptcy Can and Can't Do
At The Sellers Law Firm we have seen just almost every misconception about what a Chapter 7 bankruptcy and Chapter 13 debt consolidation can and can't do. We have heard just about every story about what someone's, neighbor’s friend's cousin was able to do in their bankruptcy. Most of the time we tell our clients that simply did not happen; someone either misunderstood what they heard or someone was simply lying to the person about what was able to occur in the debt consolidation plan or bankruptcy. Before we file a petition for a Chapter 7 or Chapter 13, we want to make absolutely sure that the client has realistic expectations about what we can do and what we can't do.
If you are facing serious debt problems, then bankruptcy is a powerful remedy that can be used to help you. It is a tool to help you resolve your financial problems; however, like with any tool it requires work to be used properly. Both Chapter 7 and Chapter 13 are very good at wiping out credit card debt and other unsecured debts. These may be debts such as payday loans, medical bills, and collection accounts. The reason that both a Chapter 7 and Chapter 13 are excellent ways to help with unsecured debt is because the creditor does not have a lien on your property, and the creditor cannot repossess any of the items if you fail to pay the debt. The only way that an unsecured creditor would be able to take any of your property would be to sue you, obtain a judgment, and execute on that judgment in an attempt to collect property to satisfy the debt. Once the judgment is obtained the unsecured creditor then actually becomes a secured creditor.
A Chapter 7 and Chapter 13 are both excellent at stopping creditors from harassing you and stopping collection activity! If you are receiving harassing phone calls or letters, then both a Chapter 7 and Chapter 13 will stop the harassment, the phone calls, and the letters. If your creditor is calling your work or calling your family or friends, then it will also put an end to this. A Chapter 7 and a Chapter 13 will give you some peace of mind and help you sleep better at night!
There are a few things that a bankruptcy can't do. A Chapter 7 bankruptcy nor a Chapter 13 debt consolidation plan will eliminate a debt that you owe on a secure piece of property, and allow you to keep the property without paying at least part of the debt. In other words it will not eliminate the lien from this property. A bankruptcy can prevent the repossession of the property, but if you wish to keep the property, then you must keep paying for the property either through a reaffirmation agreement in a Chapter 7 or through your Chapter 13 debt consolidation plan. A Chapter 7 nor a Chapter 13 will eliminate child support or alimony obligations; you will continue to owe these types of debts in full just as if you had never filed a bankruptcy. You may use your Chapter 13 debt consolidation plan to provide for these debts to be repaid in full through the plan.
Only in a few very select very limited situations may student loans be wiped out through a Chapter 7 or Chapter 13. There are a strict set of rules that judges must follow in order to discharge student loans. In order to discharge a student loan our Montgomery bankruptcy attorneys must show that the loan would cause you undue hardship which is a very tough standard to meet. We must also show that you have a very small likelihood of ever being able to repay these loans in the future. (For more information please see the page on student loans on our website.) Also most tax debts cannot be eliminated through a Chapter 7 or Chapter 13. There are limited circumstances in which taxes may be eliminated and we suggest that you look at the page on our website regarding taxes.
Our Montgomery bankruptcy lawyers are always ready to answer any questions about what you can and can’t do in a Chapter 7 or Chapter 13. All consultations are always free, and we can usually see you within 24 hours! We have offices located in Montgomery, Selma, Greenville, and Troy. You may reach us at 334-LAWYERS (529-9377) or us the “text us” link or Contact Form on our website. Remember that doing nothing, changes nothing so act today!