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What bankruptcy cannot do


If you are in serious debt and you're considering filing for bankruptcy there are some things that bankruptcy cannot help you with that you'll need to be aware of before you file.

Bankruptcy and Secured Credit

If you own certain types of property that are secured by physical assets such as a motor home, boat or automobile, bankruptcy will not help you with these assets. In fact, filing bankruptcy will eliminate the debt that is typically associated with these assets but there is nothing that will stop the creditor from seizing the assets.

Child Support and Alimony Payments

Filing for bankruptcy does not allow you to eliminate existing back child support or alimony payments. In fact, if you file Chapter 7 bankruptcy proceedings you will quickly discover that these back charges are automatically added in by the court (often with interest) and are not eliminated. If you file a Chapter 13 (reorganization) your plan will include payments to repay these debts as part of the overall plan.

Student Loans and Bankruptcy

Student loans except in extremely rare cases are not eliminated by filing for bankruptcy. The only way these loans would be cleared by bankruptcy is if you can prove beyond any reasonable doubt that repayment would cause extreme financial hardship.

Bankruptcy and Taxes

Typically most tax debts are not able to be discharged through bankruptcy. In some cases income taxes that are three (3) years old or more may be considered part of your bankruptcy but if there are suspected cases of fraud, failure to file or other circumstance, these may be denied. Payroll taxes are not eligible to be discharged during bankruptcy.

Chapter 11 Bankruptcy
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Personal Injury/Restitution Awards

If you have been ordered to pay restitution or personal damages these are not able to be discharged during bankruptcy. You will be required to include all of these items on your bankruptcy filing (as debts) but they will not be included in the debts to be discharged.

Debts You've Not Included

If you file for bankruptcy and you fail to include debts that should have been listed (secured or unsecured) you cannot later claim that they are discharged as a condition of a bankruptcy. To ensure that you have included all dischargeable debts you should request copies of your credit report and make sure that each of the debts you believe you owe is included in your original filing.


With the exception of revolving consumer debt or medical bills, you are obligated to repay most debt even when you file for bankruptcy. If the majority of your debt is secured debt (i.e. home, automobile) or non-dischargeable debt (i.e. student loans, taxes, child support, alimony, etc.) you may want to consider filing Chapter 13 Bankruptcy (i.e. restructuring of debt) versus Chapter 7 Bankruptcy (i.e. discharging debt).

Make sure you fully understand your rights and your obligations when filing for bankruptcyso you don't find yourself with debt you thought would be discharged.

Related topics: Bankruptcy Introduction, Types of Bankruptcy, New Bankruptcy Laws, Life After Bankruptcy




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