Federal bankruptcy law allows debtors to discharge certain debts in order to receive a fresh financial start. There are, however, limitations to what an individual can do under federal bankruptcy laws. This article discusses a few of the main limitations of filing bankruptcy for debt relief.
Federal bankruptcy law only allows you to discharge unsecured debt. In addition, certain debtm such as child support, alimony, most student loans, and most taxes, cannot be discharged by bankruptcy.
Mortgages and Liens
With the exception of some liens on exempt personal property where you can receive a discharge and keep the asset without making any further payments, most mortgages and liens are non-dischargeable. If you want to keep your house, you must continue making your mortgage payments. If you have a car you have financed and you want to keep it, you must continue making the payments.
If you are behind in your mortgage payments, you can use chapter 13 bankruptcy to repay past due mortgage payments over time in order to keep your home. Furthermore, with Chapter 7 bankruptcy, certain assets, such as your family car, may be kept by redeeming it from the lien (purchasing it for what its worth). For example, if you owe $3000 on your car, but it’s only worth $1500, you may be able to keep the car by redeeming it for $1500.
Wrongful conduct can also make some debts non-dischargeable. For example, if it can be proven that you incurred credit card debt without the intent or the ability to repay, or if you have obtained loans by providing falsified financial information, you may not be able to have this debt discharged by filing bankruptcy. Furthermore, you may be subject to criminal prosecution.
Involuntary Bankruptcy Dismissal
Under certain circumstances, you may be denied a discharge altogether, and you will continue to be responsible for all of your debt, as if you never even filed for bankruptcy. This result typically happens in the following cases:
- If you fraudulently transfer assets prior to filing bankruptcy.
- If you hide or attempt to hide assets.
- If you make false statements to the bankruptcy court.
- If you disobey the bankruptcy court.
In addition to being denied a discharge under federal bankruptcy law, you may also be charged with a federal crime and face fines and/or imprisonment.
Federal bankruptcy law limits the frequency with which you can receive a discharge of your debt by filing bankruptcy. These limits depend on the chapter of bankruptcy under which you are filing.
There are some limitations to filing bankruptcy for debt relief. Certain debts, such as child support, alimony, federal income taxes, and certain student loans are non-dischargeable. In addition, most mortgages and liens are non-dischargeable. Wrongful conduct, such as supplying false financial information in order to receive a loan, or incurring debt that you have no intention or ability to repay, can also make some debts non-dischargeable. Finally, you may be denied a discharge of your debt altogether under certain circumstances.
Free Bankruptcy Consultation
Do you want to know whether you qualify for debt relief under the Bankruptcy Act? Would you like to know the costs and procedures of an Oklahoma bankruptcy? Call (405) 563-7888 for a free consultation with a Oklahoma City bankruptcy lawyer or (888) Debt-Line for an Oklahoma bankruptcy attorney handling bankruptcies statewide. Our attorneys have years of experience in Oklahoma bankruptcy law and in applying Oklahoma bankruptcy exemptions, so that Debt Line Law Office clients can keep their exempt property and still discharge unsecured debts through a Chapter 7 bankruptcy in Oklahoma. With a ten (10) minute, free phone consultation with one of Debt Line’s Oklahoma City bankruptcy lawyers, you can know what you qualify for and the costs and procedures involved.