If you are spending more than you are saving and have more debts than you can successfully pay in your lifetime, filing for bankruptcy may serve you well. The procedure is governed by a federal law known as the Bankruptcy Code and it can go a long way in helping you get back on your feet financially.
However, most people do not realize that even though bankruptcy can give them some relief, it is not a magic wand making all their debts disappear.
What Bankruptcy Cannot Do
Do Away with Tax Debt
If you opt for Chapter 7 bankruptcy, you still have to pay all pending federal tax debts but you can file out some of them in Chapter 13 filing. A bankruptcy attorney can help you determine which option is best for you.
Do Away with Support Obligations
If you file for bankruptcy, you still must pay child and spousal support. If you file for Chapter 13, you will also have to show how previous payments will be made as well, according to the repayment duration.
Do Away with Student Debt
Bankruptcy cannot do away with most student loans, but some can – if the one filing it is disabled and can prove that paying can result in difficult times and hardship.
Do Away with All Debt
By filing for Chapter 13, most of the debt has to be paid by the debtor even those that were not mentioned in the filing such as fines for criminal conduct, and other debts that are prohibited as per the law.
When You Should Declare Bankruptcy
The best thing to do to determine this is by keeping the length of time it will take you to pay off debts. If you think you can pay them off within five years reasonably, then filing is a good idea.
You must understand this is not a punishment – it is a chance for you to get your finances back on track so you can have a stable life. If mortgages, student loans, credit card debt and other financial obligations have crippled you, bankruptcy is the best answer.
If you decide to take this course of action, get in touch with our attorneys at Jackson Abdalla Law Group in Elgin, IL today. We have years of experience helping clients with filing Chapter 7 and 13 bankruptcy and can help you too with critical advice and solutions. Get in touch with us for a consultation today.