Bankruptcy can be an effective solution for many debt-related problems but is not a universal fix for every financial challenge. It may not always be the best choice for every client. To make an informed decision, take advantage of our firm’s free consultation with experienced AZ bankruptcy attorneys. A personalized debt evaluation will help you explore your options and determine if bankruptcy aligns with your financial goals.

While bankruptcy can discharge certain debts, it does not apply to all types of obligations. For instance, debts like student loans, back child support, alimony payments, and most tax liabilities cannot typically be eliminated.

What Types Of Debts Are Excluded From Bankruptcy?

While bankruptcy is an effective tool for eliminating many kinds of debt, certain obligations are excluded and remain your responsibility even after the process is complete. These include legal and financial commitments deemed non-dischargeable under bankruptcy laws.

For instance, student loans are notoriously difficult to discharge and typically require proving undue hardship—a standard that’s rarely met. Similarly, court-ordered payments such as child or spousal support, as well as most tax debts, are categorized as priority obligations and are not affected by bankruptcy.

Criminal penalties, including restitution and fines related to DUI convictions or other offenses, are also not subject to discharge. It’s important to understand these exceptions to avoid surprises during the bankruptcy process. Consulting with a knowledgeable attorney ensures you have a clear understanding of which debts can and cannot be resolved through bankruptcy.

Will Bankruptcy Clear Tax Debts Or Other Government-Related Obligations?

Tax debts are challenging to discharge under bankruptcy laws. Only specific types of older tax debts may qualify under strict conditions, such as income taxes that are at least three years old, filed on time, and do not involve fraud.

However, most recent tax liabilities, payroll taxes, and penalties are not dischargeable. Additionally, debts related to government obligations, like fines or penalties for breaking the law, cannot be eliminated. This includes traffic tickets, criminal restitution, and court fines.

It’s important to note that even if certain tax debts are discharged, tax liens filed by the government before your bankruptcy will remain attached to your property. These limitations mean you may still have financial obligations to federal, state, or local governments after your bankruptcy case is resolved.

Can Bankruptcy Stop Foreclosure Or Repossession Permanently?

Bankruptcy can temporarily halt foreclosure or repossession through an automatic stay, which immediately stops creditors from pursuing collection actions. However, this relief is temporary.

For secured debts like a mortgage or car loan, bankruptcy doesn’t eliminate the creditor’s right to seize the collateral if payments remain unpaid. For instance, if you file for Chapter 7 bankruptcy, your personal obligation to pay the debt may be discharged, but the lien on the property remains. This means the lender can still foreclose on your home or repossess your car after the bankruptcy process if you can’t catch up on payments.

In Chapter 13 bankruptcy, you might be able to keep your property by restructuring your debt, but only if you can adhere to the repayment plan. Bankruptcy isn’t a permanent fix for secured debts.

Will Bankruptcy Remove Legal Obligations From Divorce Settlements?

Bankruptcy typically does not remove legal obligations stemming from divorce settlements. Debts like child support, alimony, and other court-ordered payments are considered priority debts and cannot be discharged under bankruptcy laws. Even property division agreements outlined in a divorce decree are often not dischargeable in Chapter 7 bankruptcy, though Chapter 13 may allow some restructuring.

For example, if you agreed to take responsibility for a joint debt during the divorce, creditors can still pursue you for repayment despite bankruptcy. Additionally, filing for bankruptcy won’t override the terms of a divorce settlement or modify ongoing financial responsibilities. It’s essential to consult Arizona bankruptcy lawyers and a family law expert to understand how bankruptcy may intersect with your divorce obligations.

Take Action Today

If you need more help with bankruptcy, contact us at Chapter Bankruptcy Lawyers. We will offer proper assistance to help you get a fresh start with your finances. Call us now!

If you’ve received a notice that a creditor is suing you, the good news is that you can still file for bankruptcy. In fact, bankruptcy can provide immediate relief by stopping most legal actions against you. Here’s what you need to know:

The Automatic Stay: Your Shield Against Lawsuits

When you file for bankruptcy, an automatic stay goes into effect. This powerful legal tool halts almost all collection actions, including lawsuits, wage garnishments, and foreclosures. Once your bankruptcy petition is filed, creditors must pause their legal actions, giving you the opportunity to address your debts without the pressure of ongoing litigation. However, there are exceptions, so it’s critical to consult with an expert bankruptcy attorney to understand how the automatic stay applies to your specific case.

How To Protect Your Assets During Bankruptcy

Filing for bankruptcy doesn’t necessarily mean losing your home or car. Chapter 7 bankruptcy allows you to use exemptions to protect certain assets within state and federal limits. Alternatively, Chapter 13 bankruptcy provides a repayment plan that helps you catch up on missed payments and retain essential property. An experienced bankruptcy attorney can guide you through the process to maximize asset protection.

Choosing The Right Bankruptcy Chapter

Your choice of bankruptcy chapter depends on your financial situation, including your income and the types of debt you owe. Chapter 7 is ideal for quickly discharging unsecured debts, like credit cards or medical bills, if you qualify based on income. Chapter 13 bankruptcy is better suited for individuals with a steady income who want to create a repayment plan to keep secured assets. An attorney can evaluate your circumstances and recommend the best option for you.

What Happens To Your Debts?

Bankruptcy eliminates many types of unsecured debts, such as credit card balances, personal loans, and medical bills. However, certain obligations—like student loans, child support, alimony, and some taxes—are generally non-dischargeable. For secured debts tied to assets, you may need to reaffirm or repay them to retain the collateral. Understanding what debts can and cannot be discharged is essential, and your attorney will ensure you are fully informed.

Why Work With A Bankruptcy Attorney?

Navigating bankruptcy laws can be overwhelming, especially if you’re facing a lawsuit. A skilled bankruptcy attorney will handle the legal complexities, ensure accurate filing of paperwork, and represent you in court hearings. They can also communicate with creditors on your behalf, protect your assets using applicable exemptions, and guide you toward the best financial outcome. With the right legal support, you can avoid costly mistakes and take the first step toward rebuilding your financial future.

Take Action Today

If a creditor is suing you, don’t wait. Filing for bankruptcy can provide the protection and relief you need to address your debts and stop legal actions. Contact us today to discuss your case and explore your options with an experienced bankruptcy attorney.

According to bankruptcy law, your filing will remain on your credit report for ten years. However, you can start repairing your credit right away. In other words, filing for bankruptcy will have a significant impact on your credit, but it won’t ruin it for good. 

While your credit score will drop initially and the bankruptcy will stay on your credit report for several years, it’s not a permanent mark.

Making timely payments on your car, mortgage, rent, and other bills will help your credit score after you have been discharged from bankruptcy. Many people who have filed for bankruptcy can purchase a car or even a home within a year of filing!

What Is The Immediate Impact On Credit When Filing For Bankruptcy?

Filing for bankruptcy has a significant initial impact on your credit score. Bankruptcy is considered a major negative event by credit reporting agencies, and it can cause your credit score to drop dramatically, often by 100 to 200 points or more, depending on your starting score. This drop occurs because bankruptcy shows that you are unable to meet your financial obligations, which is a red flag for lenders.

However, many factors influence how big this impact is and how it’ll affect your credit report. The type of bankruptcy is usually the first thing that indicates how long it’ll stay on your credit report. Keep in mind that Chapter 7 bankruptcy remains for up to 10 years, while Chapter 13 can stay for 7 years.

Will Bankruptcy Wipe Out All Of My Debts?

Not every debt can be discharged in bankruptcy. In a Chapter 7 bankruptcy, most unsecured debts, such as credit cards, medical bills, and personal loans, can be discharged. However, certain obligations, such as child support, alimony, most student loans, and tax debts, are typically non-dischargeable. Similarly, you will still owe secured debts, such as mortgages or car loans, unless you surrender the assets that secure these loans. In Chapter 13, debts are restructured rather than eliminated, allowing you to pay them over time. While bankruptcy offers substantial relief, it’s important to understand which debts will still need to be managed after the process is complete.

Will I Lose All My Assets If I File For Bankruptcy?

Whether you lose assets in bankruptcy depends on the type you file. In Chapter 7 bankruptcy, some of your assets may be sold (liquidated) to pay off creditors. However, each state has “exemptions” that allow you to keep certain essential assets, like your home, car, personal belongings, or retirement accounts. Chapter 13 bankruptcy, on the other hand, allows you to keep your assets while setting up a repayment plan to pay off debts over time. Many people can keep most, if not all, of their property during bankruptcy, but it’s important to discuss specific exemptions with a bankruptcy attorney to understand how your assets may be affected.

Can I File For Bankruptcy More Than Once?

Yes, you can file for bankruptcy more than once, but there are restrictions on how often you can do so and receive a discharge. For example, if you previously filed for Chapter 7 bankruptcy and received a discharge, you must wait eight years from the filing date before filing for Chapter 7 again. If you filed for Chapter 13 bankruptcy and received a discharge, you must wait two years before filing another Chapter 13 case. If you’re switching between Chapter 7 and Chapter 13, the waiting periods differ. The timeframes are in place to prevent abuse of the bankruptcy system, but multiple filings are allowed under specific conditions. Consulting with an experienced Arizona bankruptcy lawyer can help clarify these rules.

Can I Rebuild My Credit After Filing For Bankruptcy?

Yes, you can rebuild your credit after filing for bankruptcy. To start the rebuilding process, create a budget and stick to it so you avoid falling into debt again. Secured credit cards are a great way to demonstrate responsible credit use; by making timely payments, you’ll slowly improve your credit score. Keeping balances low, avoiding new debt, and making all bill payments on time are crucial steps. Within a few years, with consistent effort, you can recover a healthy credit score, making it possible to qualify for loans, credit cards, and even home mortgages in the future.