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Understanding how bankruptcy can help with debt relief

Virginia residents who are struggling to keep up with their debt payments could benefit from filing for bankruptcy. Mortgages, auto loans and credit card bills are among the types of debts that could be discharged. It is also possible to have rent, past due utility bills and medical bills taken care of in a bankruptcy case. However, there are many types of debts that either can't or are rarely reduced or eliminated in bankruptcy.

For instance, student loan debts usually can't be discharged unless they cause an extreme hardship. Typically, a student loan debtor would move to an income-based repayment plan to lower his or her monthly payments. If a person owes money to the government, balances owed are unlikely to be done away with. This includes most income and payroll tax debt as well as almost any fines incurred for a violation of state or federal law.

In addition, child support and alimony payments are almost never discharged through bankruptcy. However, courts may work with individuals who are having financial difficulties. If a particular debt is allowed to be discharged, it may be wiped away through either Chapter 7 or Chapter 13 debt. In either scenario, the bankruptcy may remain on a credit report for up to 10 years.

Individuals who are seeking debt relief may be able to find it by filing for Chapter 13 bankruptcy. While debts will not be discharged right away, individuals may be able to keep property and stop creditors from contacting them. In some cases, individuals can obtain new loans while their repayment period is still ongoing.

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