How Bankruptcy Can Help You, Even If Your Debts Can't Be Discharged
Bankruptcy is a common solution for many Americans, with more than 1,000,000 filings occurring between March 2013 and March 2014. Bankruptcy is a process that involves the writing off of certain debts. While the situations below may not be able to be written off, bankruptcy can help in an indirect way.
Student Loan Debt
In extreme cases, student loan debt can be discharged when bankruptcy has been filed, but this requires extensive proof of hardship, continuance of the hardship for an extended period of time, and that you made a good faith effort to pay off your debts.
If you're struggling to pay off your student loan debt, you aren't alone. Almost 60% of borrowers are struggling to pay off their debts. Fortunately, many student loan lenders offer a variety of payment plans, and there are income-based plans for those who're struggling to make ends meet. You may also qualify for loan forgiveness through your job. While your student loans may not be discharged, other debts will, which can free up some money to put towards your student loans.
Child Support Payments
While Chapter 13 bankruptcy can help you to catch up on overdue child support payments neither Chapter 13 nor Chapter 7 will be able to wipe out your obligations to pay it.
If you're overdue on child support payments, filing for bankruptcy and working a repayment plan can show the court that you're making a good faith effort to pay off your dues. This can mean you won't be required to serve jail time and you may be able to avoid wage garnishment as well. So, while you'll be responsible for keeping up with current payments and making up for past due ones, it can help you to get back on track with your payments while avoiding penalties.
A secured debt is a debt that is backed by collateral. This means that if you fail to make payments, the lender can still recover some of their loss by seizing the agreed upon collateral. A common example of this is a mortgage. If you fall behind on payments, the bank can foreclose on you.
If you haven't fallen behind on your mortgage just yet, by filing for Chapter 7 bankruptcy, you may be able to surrender the property and walk away free and clear. If, however, you have fallen behind, the lender can usually request the court's approval to take back their property. So, while your debt will be discharged, you will lose your home.
Bankruptcy is a last resort for many individuals struggling to make ends meet. If you find yourself drowning in debt, bankruptcy may be an option for you. While certain debts can't be discharged (child support), others require special circumstances for discharge (student loans), and others may still result in collateral loss (secured debts), bankruptcy may still be an option. To learn more about the options available to you, speak with an experienced bankruptcy attorney such as Harold Jarnicki Attorney At Law.