There are a lot of misconceptions out there about the bankruptcy process. Although it is one that can provide very real debt relief, a lot of people think that it will forever mar their credit report and leave them without the financial resources that they need to obtain a sense of stability.
What bankruptcy cannot do for you
But that simply isn’t the case. In fact, here are the limitations on what bankruptcy can do for you:
- A bankruptcy cannot eliminate a lien that has been placed on secured property. So, even though bankruptcy may eliminate many of your debts, it may not completely prevent foreclosure or repossession unless you can utilize the time that bankruptcy buys you to get caught up on payments.
- Bankruptcy won’t help you avoid child and spousal support payments. These arrearages aren’t dischargeable in bankruptcy.
- Student loans probably will not be dischargeable in your bankruptcy proceeding unless you can show that you suffer from an undue hardship. Given the state of the law, this is a high hurdle to clear, although it’s not entirely impossible.
- Your tax debts will remain even after you successfully navigate the bankruptcy process.
- Fines, penalties, and judgments against you will also likely remain after bankruptcy.
What bankruptcy can do for you
What bankruptcy can do for you, though, is provide you with real debt relief. You may be able to shed much of your debt, get creditors off your back, and stay repossession and foreclosure until you can get your feet under you. In other words, the benefits can make a tremendous difference in your financial standing.
The benefits likely outweigh the disadvantages
We do not tell you the shortcomings of bankruptcy to dissuade you from seeking out the process. In fact, we believe that the benefits of bankruptcy outweigh any perceived disadvantages. That is why if you are thinking about how you can alleviate your debt burden, you may want to consider discussing Chapter 7 or some other form of personal bankruptcy with an attorney of your choosing.