Bankruptcy Generally Wipes Out Credit Card and Other Types of Unsecured Debts
The primary reason people file bankruptcy is to obtain a court-ordered discharge of debt. However, not all forms of debt are dischargeable in bankruptcy. Before you file bankruptcy, it is important to understand the nature of your debts, and which debts can and cannot be discharged in bankruptcy.
I am Neil Warrenbrand, a Boston lawyer who helps individuals and small businesses in Massachusetts discharge debts by filing bankruptcy. I offer a free initial consultation from my Boston office and at my meeting locations throughout the Greater Boston, Metro West and North Shore areas, to discuss your debts and determine the extent of relief you can gain by filing bankruptcy.
The Difference between Secured and Unsecured Debt
Secured debts are debts whose repayment backed by pledged property, such as your home or your car. A creditor has the right to foreclose or repossess secured property if the debt is not repaid. While filing bankruptcy will put a temporary stop to a foreclosure or repossession, you will have to get caught up on your payments to keep the property. Filing Chapter 13 bankruptcy gives you up to five years to get caught up on arrearages.
Unsecured debts are debts whose repayment is not backed by property. Examples of unsecured debts are credit card debts, hospital and medical bills, and payday loans. Some second and third home mortgages may also be deemed unsecured, and, in instances where the balance of the first mortgage is higher than the value of the home, can be discharged in a Chapter 13 or Chapter 11 bankruptcy.
Putting an End to Collection Actions
A creditor can file an action to garnish your wages to collect payment of unsecured debts. However, the automatic stay that enters upon filing for bankruptcy protection stops garnishments and all other collection tactics, including those harassing telephone calls. You can obtain a full discharge of dischargeable unsecured debts by filing Chapter 7 bankruptcy. You can also discharge your unsecured debts by paying a percentage of their amount over a period of three to five years by filing Chapter 13 bankruptcy.
Student Loans and Child Support Payments
Some debts cannot be discharged. Generally, child support obligations and student loans are non-dischargeable. However, student loans may be dischargeable if the Bankruptcy Court determines that the repayment of such loans creates an undue hardship. Child support arrearages can be paid through a Chapter 13 payment plan.
Free Consultation With a Bankruptcy Attorney
To discuss dischargeability of your debts with an experienced and compassionate bankruptcy lawyer, call 866-959-9065 or fill out the contact form on this Web site to schedule you free initial consultation. My office is conveniently located in downtown Boston and accessible by all T lines. I also have meeting locations throughout the Greater Boston, Metro West and North Shore areas to serve my clients' needs.