What Debts Can Be Discharged?
Contrary to conventional belief, not all debts qualify for bankruptcy discharge. While the majority of unsecured debts, such as medical expenses and credit card balances, qualify, there may be exceptions. Some tax debts, court-ordered payments, and personal loan debts may be excluded from bankruptcy. There are specific criteria for determining whether or not a particular income tax debt qualifies as eligible. Student loan debts and past-due child support payments are two debts that rarely qualify for bankruptcy discharge. Generally, secured debts such as a mortgage or auto loan qualify for bankruptcy, but typically only Chapter 13. Knowing the type of debt you carry and its likelihood of being discharged can prevent you from squandering time and effort on a case that may ultimately be dismissed.
Are My Assets At Risk?
Although the majority of people believe that all assets are at risk in bankruptcy, this is rarely the case. In some instances, the bankruptcy court may determine that your financial situation necessitates the sale of a few assets to satisfy your debts. Again, this is not the norm, and the vast majority of people discover that their assets are completely protected by bankruptcy exemption laws. As long as payments are made in accordance with the repayment plan, assets included in a Chapter 13 petition are generally protected from creditors.
Is There Anything I Must Do Initially?
Prior to registering for bankruptcy, the majority of individuals are in a frenzy to resolve their financial difficulties. Even though there is a great deal to do before filing for bankruptcy, there are also measures that must be taken to prevent certain actions. For instance, selling or giving away assets prior to filing for bankruptcy can be problematic and hinder the case's outcome. Additionally, increasing your income or reducing your obligations could have a negative impact on the outcome of your case. The general norm is to halt all unnecessary spending, excessive debt payments, and asset transfers in the six months prior to filing for bankruptcy.""
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