How Bankruptcy Affects Debts and Lawsuits

Fort Worth Bankruptcy Lawyers Helping Eliminate Debt

Filing for bankruptcy can be a very smart move if you are facing many debts and lawsuits. Bankruptcy either defers debts, puts you on a payment plan you can handle, or gets rid of them entirely. And all lawsuits related to debts must be put on hold as soon as you file.

Bankruptcy law is complex, and it has different implications for each type of debt and lawsuit. Below are just a few examples of what a bankruptcy can do. For more information about any of the below or any other types of debt, feel free to contact Fears | Nachawati and speak with one of our attorneys.

Student Loans & Bankruptcy

While you are in bankruptcy, student loans are often deferred until the bankruptcy is complete. Once the bankruptcy proceedings are over, you will have to start paying student loans again. If you undergo a Chapter 13 bankruptcy, you might be making some payments, but they will be smaller than your current payments.

Alimony, Child Support & Bankruptcy

You can avoid garnishment of wages for alimony or child support by filing for a Chapter 13 bankruptcy. The bankruptcy proceedings will allow you to get current at a pace you can handle. But you will not be able to discharge alimony or child support at the end of a bankruptcy.

Tax Lien & Bankruptcy

Many people will tell you that tax debt is the toughest type of debt to discharge through bankruptcy. But there are many circumstances in which they can be wiped away. For example, our attorneys can often eliminate tax debt over 3 years old through a Chapter 7 bankruptcy and eliminate tax debt less than 3 years old through a Chapter 13.

Medical Bills & Bankruptcy

Each year many people living in Fort Worth find themselves facing bankruptcy through no fault of their own. The American Journal of Medicine reported in 2009 that medical bills contributed to more that 60 percent of U.S. personal bankruptcies. A catastrophic medical condition can wipe out savings, assets, and even cause loss of income.

The study conducted by researchers from Harvard Law School, Harvard Medical School and Ohio University found that more than 75 percent of these bankrupt filers had some form of health insurance, two-thirds were homeowners, and three-fifths had gone to college. Many of the debtors were average middle-class families who saw their lives tossed upside-down after a serious illness.

"Our findings are frightening. Unless you're Warren Buffett, your family is just one serious illness away from bankruptcy," said lead author Dr. David Himmelstein, an associate professor of medicine at Harvard Medical School.

While medical expenses can lead to bankruptcy, the federal law requires the debtor to include all debts in a bankruptcy case, including auto loans, mortgages, and credit cards. A “medical bankruptcy,” when the debtor only discharges medical debt, is a myth. The bankruptcy laws do not allow the debtor to pick and choose which debts are included and which are excluded. Debts are treated fairly and equally in bankruptcy, and the debt classes are structured to avoid preferential treatment of one creditor over another within the same class.

For example, a hospital and a credit card company are generally classified as unsecured creditors and will receive the same treatment during the bankruptcy. If there are no assets available to pay these debts, both debts are discharged at the end of the case. However, while a debt may be discharged and no longer legally enforceable, the debtor may always voluntarily repay the creditor.

If your family is faced with high medical expenses, consult with an experienced bankruptcy attorney and discover your options. The federal bankruptcy laws can discharge your medical bills and provide a fresh start on a better financial future.

Contact Us

You likely have many more questions about what filing for bankruptcy can do for your debts and lawsuits. Contact us to speak with one of our experienced bankruptcy lawyers. We maintain office hours 6 days a week and can meet with you in the evenings or on weekends. Flexible payment plans are available.

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We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.