Law Offices of Robert M. Kaplan, P.C.

What are the limitations of bankruptcy?

The bankruptcy process can:  

  • Eliminate the legal obligation to pay most or all of your debts. This is called a “discharge” of debts. It is designed to give you a fresh financial start.

  • Stop foreclosure on your house and allow you an opportunity to catch up on missed payments. However, it does not automatically eliminate mortgages and other liens on your property without payment.

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

  • Stop wage garnishment, debt collection harassment, and similar creditor actions to collect a debt.

  • Restore or prevent termination of utility service.

  • Allow you to challenge the claims of creditors who have committed fraud or who are otherwise trying to collect more than you really owe.

The bankruptcy process cannot:  

  • Eliminate the rights of “secured” creditors who have a mortgage or lien on property as collateral for the loan. Common examples are home mortgages and car loans.  You can force secured creditors to take payments over time in the bankruptcy process and bankruptcy can eliminate your obligation to pay any additional money if your property is taken. However, you generally cannot keep the collateral unless you continue to pay the debt.

  • Discharge types of debts singled out by the bankruptcy law for special treatment, such as child support, alimony, certain other debts related to divorce, some student loans, court restitution orders, criminal fines, and some taxes.

  • Discharge debts that arise after bankruptcy has been filed. 

  • Protect cosigners on your debts. A bankruptcy discharge does not protect the relative or friend who has co-signed a loan.