If you are considering filing for bankruptcy you have, no doubt, considered a number of the positive effects of filing for bankruptcy. To name a few: filing for bankruptcy can reduce or eliminate unsecured debt obligations, can provide peace of mind, and can get a debtor back on track financially. However, bankruptcy is not a solution for all types of problems. There are a number of things that bankruptcy cannot do, and it is equally important to consider these issues, along with the more positive aspects, when considering filing for bankruptcy.
First, filing for bankruptcy cannot eliminate the rights of secured creditors. Common examples of secured debts are mortgages and cars. Some credit cards, including Best Buy credit cards and many furniture store credit cards, are secured creditors. If you are unsure about whether a debt is secured you should speak with an attorney prior to filing your case. Basically, in the case of a secured creditor, the debtor with either have to pay the debt or surrender the property. You cannot keep the property and not repay the debt owed to the creditor. In a chapter 7 the debtor would need to be current at the time of filing to ensure that the creditor does not file a motion for relief to foreclose or repossess the property. In a Chapter 13 any back due payments owed to the creditor can be paid through the plan over a certain period of months. The debtor would have to continue making timely ongoing mortgage payments.
Second, there are a number of debts that are not dischargeable in a bankruptcy under any circumstance. These types of debts are excluded from discharge by the bankruptcy code. If you have question regarding the types of debts that you owe and whether they are dischargeable you should speak with an attorney. Common examples include, but are not limited to: child support, alimony, debts owed for certain criminal charges, and restitution payments.
Third, bankruptcy does not address debts incurred after filing your bankruptcy. In a chapter 13 debtors need permission of the bankruptcy court to incur any new debts. In a chapter 7 debtors may incur new debt after filing their case, but should be advised that this debt is not dischargeable and the debtor will need to make continuing payments on the new debts.
If you have questions about this, or would like to schedule a free consultation, contact a St. Louis Bankruptcy Attorney Today.