What Bankruptcy Cannot Do for You

Couple filing for bankruptcy

A Chapter 7 (liquidation) or Chapter 13 (reorganization) filing offers many benefits—relief from harassment by creditors, the opportunity to wipe out unsecured debt (if you qualify) and a chance to restructure your debt so that you can meet your financial obligations. But it’s not a panacea—there are limits on the extent to which a personal bankruptcy can take care of all your financial issues.

What a Bankruptcy Filing Won’t Do for You

A Chapter 7 or Chapter 13 bankruptcy filing will not:

• Interfere with any type of lien a creditor has on property—A bankruptcy proceeding can discharge debt, but it has no impact on a lien. If your creditor has a lien, that lien stays on the property until the debt is satisfied. The creditor may exercise his or her rights under the lien and “foreclose,” selling the property at auction/sheriff’s sale. The proceeds of the sale can then be used to satisfy the lien.
• Have any impact on your obligation to pay spousal or child support—Under the bankruptcy laws, most family law obligations are exempt from discharge.
• Help you get rid of student loan obligations, with few exceptions—As a general rule, student loan obligations cannot be discharged, unless you can show “undue hardship.” The standards for meeting this test are extremely stringent.
• Affect most tax obligations—You can occasionally discharge old tax debts, but only in very limited circumstances.

If you’ve incurred debt because of fraud or misrepresentation (say, embezzlement or misappropriation of assets), you may or may not be able to discharge the debt. If the creditor objects to the discharge, the court will typically reject efforts to eliminate the debt.

There are a handful of other situations where a debt may not be discharged:

• Where you’ve caused personal injury or death while driving under the influence of drugs or alcohol
• Where you incurred fines and penalties related to a criminal prosecution
• Where there are debts you neglected to list in your petition for bankruptcy

Contact Heath, TX Bankruptcy Attorney Carrie Weir

I provide a free initial consultation to anyone with questions or concerns regarding a bankruptcy filing. Contact my office by e-mail or call me at 972-772-3083 for a private meeting. With offices in Rockwall, Texas, I represent clients in Heath, Greenville, Lavon, Wylie, Mesquite and Rowlett.

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Call Rockwall bankruptcy lawyer Carrie Weir at 972-772-3083 or fill out the contact from below for a free, confidential consultation to discuss your options.

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