Many people have questions about the bankruptcy process, ones that can be vital to the success or failure of their case. It is important for anyone considering bankruptcy to understand some of the basics about the process.
What Debts Can Be Discharged?
Most unsecured debts, such as credit cards and medical bills, can be easily discharged in bankruptcy. Secured debts, such as a mortgage or car loan, are better managed through a Chapter 13 discharge if the debtor wants to keep the property. However, there are cases in which a portion of a secured debt can be discharged in Chapter 7 if the asset is valued higher than what is owed on the debt. Some income tax debts may qualify for a debt discharge in certain situations. In general, student loan debts and back due child support payments are not dischargeable in bankruptcy.
Will My Assets Be Seized?
A common myth about bankruptcy is that all assets are at risk for liquidation in bankruptcy. While there are some cases in which the bankruptcy court may approve asset liquidation in order to satisfy debts to creditors, these cases are highly specific and rarely contain large assets. Bankruptcy exemption laws offer protection for much of one’s assets including a home, car, personal property and certain bank funds. Further, Chapter 13 filers have no risk of asset seizure as long as payments are being made according to the repayment plan.
Can I Represent Myself?
While some people have been able to successfully complete a bankruptcy case on their own, it is generally not advised. A bankruptcy attorney is well versed in the laws of the process and can help ensure the case is handled successfully. They are trained to evaluate a debtor’s financial situation and determine if bankruptcy is the best option. Further, they can ensure the documentation is completed accurately and minimize the risk of asset loss or credit damage.