What Bankruptcy can and can’t Do for You

People dealing with financial hardship can choose to file for bankruptcy to help them realign their finances and get back on track. With bankruptcy, people have the option to protect their most important assets while trying to restore their finances; and one of the ways on how bankruptcy does it is by eliminating or discharging certain types of debts.

Bankruptcy helps alleviate financial problems by wiping out unsecured debts, or debts not backed by an underlying asset (collateral). Credit card debts, including late payments and overdue, are just some of the many examples of dischargeable debt. Other common types of dischargeable debts are the following:

  • Medical bills
  • Utility bills (past dues only)
  • Debts in collections
  • Loans from family, friends
  • Auto accident claims, excluding those involving DUI

However, it is very important to note that not all debts are dischargeable under bankruptcy protection. Here are some types of debts that a bankruptcy filing cannot wipe out:

  • Domestic support obligations, such as spousal support and child support
  • Secured loans, or loans backed by an asset. This also means that if you fail to pay for a secured debt, bankruptcy cannot prevent a secured creditor from repossessing the property tied to it
  • Tax debts, unless they satisfy certain conditions
  • Fines caused by violating the law
  • Debts associated with claims of personal injury or wrongful death caused by your negligence (ex. drunk driving)

Furthermore, some debt categories are dischargeable depending on the type of bankruptcy filed. Chapter 13 bankruptcy, for instance, can eliminate some types of debts that a Chapter 7 bankruptcy can’t eliminate. These include certain debts arising out of property settlement between divorcing spouses (for instance, debts assigned to you on a joint credit card with your ex), malicious or willful damage to property (but not willful injury to another person), and debts incurred to settle non-dischargeable taxes.

Bankruptcy is a powerful tool that can help you work towards financial freedom. You only need to understand more about your circumstances in order to choose which type of bankruptcy best suits your situation.


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What if I Die without a Will?

One of the ultimate goals of estate planning is to ensure that your loved ones will be financially secured in the event that something happened to you. While planning for your loved ones’ future upon your death may sound unappealing, the reality is that conflicts may arise among your family members if you fail to plan for your estate. It is important to deal with it in a clear and transparent way to avoid conflicts in the far future.

According to the website of Arenson Law Group, PC, planning for your estate involves different issues; one of them is the creation of a valid will. A will is a legal document a person creates to indicate how they may want to distribute their properties at death. It is important to consult with a probate lawyer to learn about the different legal requirements each states has when creating a will.

If a person dies without a will, he/she is said to have died “intestate.” During intestacy, beneficiaries cannot dispute how the state would distribute the deceased person’s properties. Furthermore, you will have no control over who will receive what, and may even result in an outcome that is totally not in favor of what you wanted to happen.

The rules of intestate succession vary from state to state. In most states, for instance, the properties of an intestate person will be distributed in this manner:

  • Surviving spouse
  • Issues, or the children of the deceased
  • Parent/s, if the deceased has no surviving spouse or issues
  • Brothers and sisters of the deceased or their issues if there is no surviving spouse or parent
  • Grandparent/s. In many states, the deceased person’s property will be split into the surviving paternal and maternal grandparents and their issues
  • Uncles, aunts, and their issues
  • Commonwealth

Planning for your estate provides you great control over how you would want to secure your loved ones’ future; and so it is very important to consult with an attorney who knows well the intricacies surrounding this area of the law.


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