Declaring Bankruptcy? You Will Still Have Major Debts to Pay

Because of what's happening in the economy, a lot more people are considering declaring bankruptcy.

It's possible that it is the right thing for you to do. However, it will not automatically give you a clean slate. You still will have debts to pay.

If you are declaring bankruptcy is a serious option you should consult with an attorney first, but here are just some debts that can remain after people declare bankruptcy:

Any taxes that you owe to the IRS or to the state

Alimony

Child Support

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Student Loans

Drunk Driving Injury Awards against you

Parking Tickets

Criminal Fines

As you can see, you may be in the same (or even a worse) financial situation if you declare bankruptcy.

If you decide to go that route, here are two of your possibilities:

Chapter 13

Chapter 13 is designed to let people who have a regular income repay some or all of their debts. You will be allowed to retain the majority of your assets. Debt collection activity will end.

If you owe less than your state's minimum, they might have a three year plan. If you owe more than the state minimum, they might have a plan that could last as long as five years.

Some individuals, under certain circumstances, can keep their home according to Chapter 13.

Chapter 7

Chapter 7 requires that many of your assets will have to be liquidated in order to pay off your debts. Most, but not all of your debts will be discharged after you file. You will still have to pay all of the above listed debts, if not more.

Declaring bankruptcy is a very serious step that should not be taken lightly. You must see a bankruptcy attorney before making your decision as to whether or not it is the right thing for you and, if it is, which bankruptcy option would be the correct one for you.

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