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5 Bankruptcy Questions

5 Frequent Bankruptcy Questions

What debt can be bankrupted?

In most cases bankruptcy can eliminate all or at least a large portion of troublesome debt. Credit card debt, medical bills, back IRS taxes over 3 years old, deficiencies on financing contracts, and gambling debts can all usually be discharged as long as they don’t involve fraud.

You can’t eliminate back sales taxes of any kind, alimony, most property settlements or child support debts. Discharging a student loan in a bankruptcy filing is extremely difficult and requires and adversary action showing an extreme hardship, usually a disability expected to last for an indefinite period of time.

Does a Bankruptcy Filing affect my spouse’s credit?

A spouse’s credit score will not directly impacted by a bankruptcy filing, it may change their credit ratios slightly. Tennessee is not a community property state, which helps a lot. Ask your bankruptcy lawyer for guidance.

Will the Co-Signer Be Liable if I file Bankruptcy?

A bankruptcy discharge only affects the liability of the person receiving it. The financing entity can go after the guarantor, though in some cases a Chapter 13 will stay collection activities until a discharge is achieved.

Will I Be Able to Get Financing Again?

People get credit after bankruptcy, it’s not a financial death sentence. You’ll just have to wait a few years. As a general rule, you’ll probably be able to get most financing after about 2 years if you take steps to rebuild it, like getting a secured credit card. Bankruptcy actually improves a lot of credit scores since it can wipe out a lot of the outstanding balances and improve your debt to income ratios. Overall, you have to remember credit’s a black box with guarded formulas and no one really knows for sure, but you can make an educated guess.

Who Will Know about My Bankruptcy?

The Daily News publishes the daily bankruptcy filings. There might be some eccentric individual who gets off on watching court filings in the paper, but you will likely be lost in the overwhelming prevalence of the option with about 1-20 Memphians filing each year. In most case, the only individuals who will know about your filings will be people you tell.