Three Little Known Facts About Bankruptcy
You might have given considerable thought to your finances, and have thus decided you want to file a bankruptcy petition. Certain beliefs, however, might prevent you from filing the actual petition. Your best action right now is to educate yourself. Check out these bankruptcy facts to help you get started.
You Can't Discharge Certain Debts
It might surprise you to know that not every debt you owe is dischargeable. If you have debts that the government guaranteed, they aren't dischargeable. For example, if you have a guaranteed student loan, filing a bankruptcy petition will not relieve you of this debt. Your best bet in this case is to talk with the lender, which might offer options like income-based and interest-only repayment plans. Other debts you can't discharge under a bankruptcy petition includes the following:
- Past due taxes
- Child support payments in arrears
- Delinquent alimony
Also, if the court finds you liable because you were driving while drunk or high, you may have to pay money to the people you injured--or to their families if fatalities were involved. You can't discharge this debt.
You Can Keep Some of Your Things
Mention bankruptcy, and the thought of losing everything might come to mind. The good news is that this belief is a myth. Some of your belongings are exempt from bankruptcy liquidation. Each state law is different, but in general, likely exemptions include the following:
- Household goods
- Musical instruments
If you own your car outright, you can keep it if it's value is less than the exempt amount. For federal bankruptcies, that amount is $3,675. If you owe money on your car, the lender might repossess it when you file your petition. You also can keep wages you've earned but haven't collected. And, you can keep workers' compensation, disability payments, unemployment benefits and your pensions. Future payments for insurance policies aren't counted toward liquidation, and you can keep crime victim compensation, public assistance, social security and veterans' benefits.
You Can Payoff Debts After They're Discharged
Even though a debt discharged through a bankruptcy petition clears you of any legal obligation for the debt, you can pay your creditors when you get your finances in order. This is often a good idea if the debt affects your relationships with others. For example, if someone cosigned a loan for you, the lender might go after the cosigner for the money. If the cosigner is a friend or relative, or you want to keep your conscience clear, you can pay the debt and keep your relationship intact.
An approved bankruptcy petition can give you a chance to start over or make your debts more manageable. Whether you should file, and which chapter is right for you, might be an overwhelming decision. Talk with a bankruptcy attorney today (at Reppe Law Office or another firm), so you can learn more about the facts and myths of bankruptcy.