A bankruptcy filing is a decision that most people do not make lightly, and it is a big mistake to rush into a filing without considering one’s goals and the consequences of the action. Some people are embarrassed to file and want to get the process done quickly. However, bankruptcy in St. Charles, MO, can have long-lasting effects and is not the right option in every situation. Below are cases where debtors should be especially careful.
When there are Co-Debtors
Also referred to as co-signers, a co-debtor is someone who signs with another person on a loan or other debt. They’re typically close friends and family members, and by signing their name on a legal document guaranteeing payment, filing for bankruptcy can place them in a delicate situation. If the goal is to discharge most or all debt quickly, Chapter 7 bankruptcy in St. Charles, MO, is a good choice, but cosigners get no protection. The only approach that protects co-debtors is to file for Chapter 13, which offers a repayment plan.
When a Particular Creditor Takes Priority
Unsecured creditors include card companies and loans without collateral. If a filing includes substantial unsecured debt but the debtor wants to repay a family member first, a bankruptcy attorney can help them prioritize debt. The court-appointed trustee sees the debtor’s records and failing to include a loan in the filing can have severe repercussions. However, nothing stops the debtor from repaying a personal loan that has already been discharged.
When there is a Substantial Amount of Non-Dischargeable Debt
If a debtor wants to liquidate as much debt as possible, they should understand the kind of debt they have. Secured debts such as mortgage payments and car loans must be paid in full, and other debts under federal or state protection cannot be eliminated. If most of a person’s debt is not dischargeable, a bankruptcy filing won’t do much to improve their situation. Non-dischargeable debts include the types listed below.
• Student loans
• Alimony and child support
• Fraudulent debt
• Debts not included on bankruptcy paperwork
While a bankruptcy filing may be the answer some people are looking for, a debtor shouldn’t enter into Chapter 7 or Chapter 13 bankruptcy in St. Charles, MO, without knowing the potential pitfalls. A bankruptcy attorney with Van Dillen & Flood, P.C. can tell clients where to tread lightly, and help them get through the process as easily as possible.