A lot of people deal with financial stress and find themselves unable to pay their monthly bills despite their efforts to make ends meet. If you are in this situation, you might be wondering if you should file for bankruptcy. But, if you have not tried this before, you may not know what to expect when you do so. This post will help you understand what bankruptcy can and cannot do. Consulting a Charleston, WV bankruptcy attorney is a smart decision if you are thinking about filing for bankruptcy. This way, you will have access to expert knowledge to help you decide the type of bankruptcy to file, depending on your situation and preference.
What Happens When You File for Bankruptcy?
A Chapter 7 and Chapter 13 bankruptcy can lessen your current personal financial struggles in many ways. Filing for bankruptcy can eliminate unsecured debt. This debt is where your creditors hole no collateral against your debt. It includes credit cards, medical bills, and others. Also, bankruptcy can eliminate secured debt, which refers to debt obtained by giving a security interest in the property bought. If you want to erase debt such as a house or car loan, you must return the property. If you want to save the asset from liquidation during bankruptcy, you must make arrangements with your creditors.
Moreover, filing for bankruptcy will stop foreclosures, repossessions, and evictions as well as top collection activities. These activities includes things such as collection calls from your creditors, wage garnishments, and threatening letters or emails.
What Bankruptcy Cannot Do
Some debt categories cannot be discharged by bankruptcy, depending on the kind of bankruptcy you will file. These include some kinds of tax claims, government fines and penalties, debts not listed in the bankruptcy filing, alimony and child supports, and more.
If you have secured debt, your creditor will put a lien on your property to collect. Although bankruptcy will eliminate the debt, it won’t eliminate the lien on your property. Thus, the debt remains unpaid after the automatic stay is lifted and your creditor can repossess or foreclose on the property.
In addition, bankruptcy cannot discharge debt related to fraud. This may happen when your creditor asserts that you committed fraud in some way such as lying on your credit application or using borrowed assets as collateral. In this situation, the credit needs to provide evidence to convince the court not to discharge your debt.