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What Is Covered in Bankruptcy
Bankruptcy is a legal process that provides relief to individuals and businesses who are struggling with overwhelming debt. It offers a fresh start by eliminating or restructuring debts, allowing the debtor to regain control of their financial situation. However, not all debts can be discharged through bankruptcy. In this article, we will explore what is covered in bankruptcy and provide answers to some frequently asked questions.
Debts Covered in Bankruptcy:
1. Credit Card Debt: Credit card debt is one of the most common types of debt discharged in bankruptcy. This includes outstanding balances, interest charges, and late fees.
2. Medical Bills: Medical expenses can quickly accumulate, leaving individuals with substantial debt. Bankruptcy can help eliminate these debts and provide much-needed relief.
3. Personal Loans: Unsecured personal loans, such as loans from family or friends, can be discharged in bankruptcy.
4. Utility Bills: Past-due utility bills, such as electricity, water, and gas bills, can be discharged in bankruptcy.
5. Lawsuits and Judgments: If you have been sued and faced a judgment against you, bankruptcy can help eliminate those debts.
6. Business Debts: Bankruptcy provides options for businesses struggling with financial difficulties, allowing them to restructure or liquidate their debts.
Debts Not Covered in Bankruptcy:
1. Student Loans: In most cases, student loans cannot be discharged through bankruptcy unless the debtor can prove undue hardship, which is a difficult standard to meet.
2. Child Support and Alimony: Bankruptcy does not eliminate obligations related to child support or alimony. These debts are considered priority and must be paid.
3. Certain Taxes: Some tax debts cannot be discharged in bankruptcy, such as recent income taxes and payroll taxes.
4. Criminal Fines and Restitution: Debts resulting from criminal fines or restitution orders cannot be discharged in bankruptcy.
5. Debts Incurred through Fraud: If a debt was obtained fraudulently or as a result of fraudulent activity, it may not be dischargeable.
6. Home Mortgages: While bankruptcy can help eliminate personal liability for mortgage loans, it does not automatically discharge the lien on the property. The lender can still foreclose on the property.
Frequently Asked Questions:
Q: How long does bankruptcy stay on my credit report?
A: Bankruptcy can stay on your credit report for up to ten years, depending on the type of bankruptcy filed.
Q: Can I keep any assets if I file for bankruptcy?
A: Depending on the type of bankruptcy filed and the exemptions available in your state, you may be able to keep certain assets, such as your home, car, and personal belongings.
Q: Will bankruptcy stop creditor harassment?
A: Yes, once you file for bankruptcy, an automatic stay is put into place, which stops all collection activities, including harassing phone calls and letters from creditors.
Q: Can I file for bankruptcy more than once?
A: Yes, you can file for bankruptcy more than once, but there are time limits between filings. For example, if you previously filed for Chapter 7 bankruptcy, you must wait eight years before filing for it again.
Q: Can my employer fire me for filing bankruptcy?
A: No, it is illegal for an employer to terminate an employee solely based on their bankruptcy filing.
Q: Do I need an attorney to file for bankruptcy?
A: While it is possible to file for bankruptcy without an attorney, it is highly recommended to seek legal advice to ensure the process is correctly handled.
In conclusion, bankruptcy can provide relief to individuals and businesses struggling with overwhelming debt. It covers various types of debts, including credit card debt, medical bills, personal loans, and more. However, certain debts, such as student loans and child support, are not dischargeable through bankruptcy. It is important to understand the specific guidelines and requirements related to bankruptcy to make informed decisions about your financial future.
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