Non-Dischargeable Debts in Bankruptcy Filing
Of the many types of debts that a person can discharge with a
bankruptcy filing, there are some forms of debt are often the most
difficult to get completely discharged without some type of
repayment plan. Whether it is a student loan, a personal loan, or a
home equity loan, bankruptcy does not always clear the obligations
of the debtor without undergoing some type of asset liquidation or
repayment agreement. The bankruptcy courts have made this provision
for several reasons and it is nearly impossible to change their
minds.
Bankruptcy filing does not solve all of a debtor's financial
problems. Courts have deemed that debts which could be harmful or
unproductive to the nature of society are non-dischargeable in a
typical bankruptcy. The idea behind this is so that people cannot
relinquish their obligations to pay child support, alimony, and
other money that contributes to the good of society. This idea of
non-dischargeable debts also spreads to student loans because of the
amount of money granted by the government each year for college
educations. Student loans are possibly the most difficult types of
loans to get discharged through bankruptcy. Until recently, they
were covered under the types of debt that were dischargeable under
loan bankruptcy guidelines, but recent amendments to the code have
changed this.
In terms of bankruptcy, business filings are often forced into a
plan to repay the business's creditors. The bankruptcy courts often
see completely discharging the debts of a business as detrimental to
society because of the ramifications involved. With a Chapter 7
bankruptcy, business assets are typically liquidated and the company
shuts down. This results in a loss of jobs that help to pump money
into the economy. This is why businesses are often forced into a
Chapter 11 bankruptcy because their debts can be reorganized and the
creditors can be paid in installments while the business continues
to operate.
For people who have fallen behind on car payments or home mortgage
payments, bankruptcy filing can grant a temporary protection from
their creditors. Chapter 13 is designed in such a way that
homeowners or consumers with other types of secured debts can retain
their property even if they have fallen behind in the payments. The
debtor makes arrangements with their court-appointed trustee to make
payments along with extra money to help them catch up on missed
payments with this type of bankruptcy. Mortgage companies are
willing to work with debtors because they would rather afford them
some leeway rather than go through the trouble of court proceedings
involved with foreclosures.
Mortgages are not impossible to get after bankruptcy. With manual
underwriting, many companies will work with your particular case to
help you achieve your home buying goals. Even though debtors who go
through Chapter 13 are favored, those who have filed Chapter 7 can
also be eligible depending on the circumstances surrounding their
bankruptcy and their current financial situation.
People who decide to go through bankruptcy will undoubtedly
experience a life changing event. Bankruptcy filing can affect a
person's finances for several years following the discharge and
oftentimes the debtor is still left with some debts that were not
dischargeable. Unfortunately, once a person has gone through a
bankruptcy, mortgage loans and other types of credit will have an
unusually high interest rate attached to their repayment
requirements.
