Michael D. Hart, P.C.

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Does bankruptcy get rid of all your debt?

| Jun 17, 2020 | Uncategorized |

Struggling with debt is something that numerous people in Virginia and across the country experience. Even if you have typically done well with managing your financial affairs, a sudden event like a medical emergency or job loss could have left you in a position where you unexpectedly could not make ends meet financially. As a result, your savings soon dwindled while your outstanding balances seemed to remain the same.

Knocking back substantial debt is not easy to do, especially if you can only make the minimum monthly payments. Interest, penalties and fees can all make it seem as if the debt never goes down, or it may even grow. Now, you feel that bankruptcy may be the best option for you to handle your financial issues, but will it help with everything?

Not all debt is forgivable

Though bankruptcy can certainly help qualifying individuals who complete the process address various types of debt, certain liabilities remain the responsibility of the petitioner, including:

  • Fines or penalties owed to the government
  • Court-ordered alimony payments
  • Court-ordered child support payments
  • Student loans
  • Court fines and penalties
  • Reaffirmed debt
  • Unpaid taxes

While some of these seem straightforward, you may have questions about reaffirmed debt. If you create a reaffirmation agreement with a creditor, it means that you agree to waive the discharge of that debt during bankruptcy in order to keep an asset. For example, you could agree to pay back the debt on your auto loan in order to keep your vehicle rather than having the debt forgiven during bankruptcy. Though this may seem appealing, it is important to remember that keeping any otherwise dischargeable debt could cause issues.

Staying financially afloat

If you do feel that bankruptcy could work for you but know that you will still have certain debts to address even after the process (such as any of those mentioned above), you will undoubtedly want to do your best to stay on top of your financial affairs. Creating a budget, avoiding taking on more debt, monitoring your credit, paying your bills on time and other steps could help you remain financially afloat and help improve your situation.

Even if you have not fully decided whether bankruptcy is right for you, you may find it beneficial to gain information on the process and the type of bankruptcy you may qualify for. Consulting with a knowledgeable attorney could help you throughout this journey to financial stability.