Personal Bankruptcy

A personal bankruptcy is a form that when filed will discharge obligations to creditors. Contrary to popular belief, personal bankruptcy does not discharge all debts. Specific types of student loans, called secured student loans, must be paid even after someone has filed bankruptcy. Also, it won't discharge taxes owed to the state or federal government. Likewise, child support payments and money owed to victims of drunk driving accidents will still be required to be paid. Chapter 7 and Chapter 13 bankruptcy filing are still subject to the above criteria.

Personal Bankruptcy does however discharge 'unscheduled debts'. Unscheduled debts are things like money owed to creditors, which include credit card debt, auto loan lenders, and money owed to personal contacts that lent you money. These creditors and others who are owed must line up to try and get any property not exempt under their state's exemption laws. Those who are deemed most worthy get their pick of the debtor's bankruptcy estate first, and on it goes until nothings left but assets that are exempt from being taken under that state's laws.

Usually states do a good job of keeping these creditors from taking everything because generally most creditors may not even receive a single penny. Since the stakes are so high for these creditors, they often try to band together to fight over who gets first pick of the bankruptcy estate, just so they can recover a fraction of what’s owed to them. It's a rather fruitless fight creditors have to go through but most people say they deserve it for lending an amount the debtor has no ability to repay.

Filing for bankruptcy is usually a very relieving experience for most people. They feel like the weight on their shoulders has lifted, it's like the greatest gift you could give them. Most people avoid credit as much as possible for a few years until their credit report is clean again so they don't have to deal with the 'ballooned interest rates'. Theirs others who talk of repairing your credit score right after bankruptcy to lower those interest rates. I think that kind of talk just gets people in trouble again, because everyone knows the best way to get your credit score up is to get credit cards and loans that will just put you back into debt.

The decision to reach out for help with your debt is not one that's easy to make. You were raised to "do the right thing", but now it’s nearly unbearable. You struggle along while your creditors are turning up the heat. And now you’re at the point where the late fees, penalties and interest expense make it impossible to keep your head above water.

Ask yourself this. If you could eliminate your debt without permanently damaging your credit, why wouldn't you?

Avoid Bankruptcy

Debt Relief

Bankruptcy is not your only option! Our goal is to help you determine the right course of action for you to take. We will connect you with a debt settlement company today that will help you avoid filing for bankruptcy protection.

Are your finances spiraling out of control? Get the information you need today to stop harassing creditor’s phone calls. Total Debt Relief provides a matching service to connect you with pre-screened Debt Settlement Professionals. These debt management pros will educate you on all of the options available to you to get out of debt. Total Debt Relief helps you make the most informed decision possible so that you can get your financial life back on track.