1. Home
2. Bankruptcy Articles
3. What Bankruptcy Can and Cannot Do For You

Bankruptcy Articles

Wednesday, December 24th, 2008

by Theodore Sliwinski, Esq.

What Bankruptcy Can and Cannot Do For You

Bankruptcy may make it possible for you to:

• Eliminate legal responsibility for many of your debts and to get a fresh start. The legal term for a  fresh start is called a “discharge.” When a debt is discharged at the close of a successful bankruptcy case, then you will have no further legal obligation to pay that debt.

• Stop a foreclosure on your house and allow you an opportunity ro catch up on missed payments.

• Prevent a repossession of your car or other property, or force the creditor to return your vehicle even after it has been taken.

• Stop a wage garnishment, debt collection harassment, and other annoying collection activities and give you a break from the never ending credit card collection calls.

• Prevent the shut off of your utility service or restore service if it has already been terminated.

• Lower the monthly payments on some debts, including some secured debts such as car loans.

• Allow you an opportunity to challenge the claims of certain creditors who have committed fraud or who are otherwise seeking to collect more than they are legally entitled to.

Despite the powerful legal protections that bankruptcy offers to  tens of thousands of New Jersey-ites each year,  this legal process cannot cure all of your financial problems. If you have a lousy job and if you need more money to have a decent life, then bankruptcy wil not solve this problem.  Moreover, bankruptcy is not feasible or a practical option for many New Jersey-ites who are swamped with consumer debt. In bankruptcy, it is usually not possible to;

• Wipe out certain rights of secured creditors. A secured creditor has taken some form of lien on your property as collateral for a debt. Some common examples are car loans and home mortgages. Although you can force secured creditors to take payments over time in the bankruptcy process, you generally cannot keep the collateral unless you continue to pay the debt.

• Discharge certain types of debts that are singled our by the federal bankruptcy law for special treatment, such as child support, alimony, most student loans, court restitution orders, criminal fines, and some taxes.

• Protect all cosigners on their debts. When a relative or friend has cosigned a loan and you discharge the loan in bankruptcy, then thecosigner may still have an obligation to repay all or part of the loan.

• Discharge debts that are incurred after bankruptcy has been filed.