Filing for bankruptcy can be a powerful tool for those overwhelmed by debt, offering a fresh start and a path forward. But not every financial obligation disappears when the process is complete.
Some debts can follow you even after bankruptcy, no matter which chapter you file under. Knowing what debts will remain can help you to make better decisions and avoid surprises down the road.
Debts that remain
Filing for bankruptcy can be a powerful tool for those overwhelmed by debt, offering a fresh start and a path forward. However, while it can erase many financial burdens, not every debt can disappear. There are two different types of bankruptcies available to the average person in debt.
The first is chapter 7, it involves liquidating your non-exempt assets in order to settle debts with creditors, allowing for immediate relief. On the other hand, Chapter 13 offers you to craft a debt repayment plan where you’ll be able to keep most of your assets, however this process can take years.
Some obligations, however, are considered too important or serious to be discharged. These debts can follow you even after bankruptcy. For example, if you decide to file a petition under chapter 7 or chapter 13 the following debts are not eliminated:
- Most student loans
- Child support
- Spousal support
- Criminal fines, such as a fine for drinking while driving
The legal system treats these as essential commitments, so they remain your responsibility.
Even with these exceptions, bankruptcy can still offer major relief, it can relieve the burden of credit card balances, medical bills and other unsecured debts that may be weighing you down. For many, that kind of fresh start can be life changing, even if a few debts remain on the table.
If you’re feeling buried by debt and unsure of what your options are, you’re not alone, and you don’t need to figure it out all by yourself. Taking the time to speak with someone who understands the system can help you get clarity and protect what matters most.