Bankruptcy is not the silver bullet that will cure all your financial issues. Many people want to know what bankruptcy can do for them here is what bankruptcy cannot do for you. There are debts that bankruptcy cannot eliminate like student loans, child support, alimony and most secured debts.
What bankruptcy cannot do for you and your student loans. Some student loans actually can be eliminated in a bankruptcy. But the rule changes over the past 25 years made it very hard to eliminate student loan debts. The law changed in 2005 further making a number of student loans what is called non-dischargeable. When looking at eliminating student loan debt you will need to know the dates that you took out the loan. Once your attorney knows this date he may be able to advise you on your bankruptcy options. Many times to eliminate student loan debt you will be required to file a lawsuit as part of your bankruptcy against the student loan lender. Check out my book for more information on student loan debt.
What bankruptcy cannot do for you in to prevent creditors from repossessing a secured property. Secured property has been pledged to cover the lender in case of some type of default. If you want to keep your secured property then you will need to make arrangements to continue to make the payments you promised when you incurred the debt.
What bankruptcy cannot do for you is to eliminate most tax debts or other non dischargeable debts. Tax debts are a creation of government as is the bankruptcy laws. Can you see where I’m going here…the creator of the rules looks out for themselves at all times. However having said that there are times when tax debts are eliminated in a bankruptcy and I suggest you speak with an experienced bankruptcy lawyer to find out the details as they relate to you situation.
What bankruptcy cannot do for you is to eliminate child support and alimony. we as a society have decided that there are certain classes of individuals that receive extra protection in certain circumstances and bankruptcy on child support is included in this category. Certainly parents have an obligation to care for their children and therefor cannot eliminate that obligation in a bankruptcy action.