Understanding Debt Discharge: A Comprehensive Guide
The Law Offices Of Diane Anderson | Folsom, CA & Jackson, CA
Compassionate legal counsel for your financial well-being.
A mountain of debt can create a mountain of stress. When you’re under financial strain, it can affect everything: your mental and physical health, your relationships, your job performance, and more. You may be struggling to not only pay your debts, but to afford your basic daily needs.
In this article, we’ll cover the basics of debt discharge and go over some of the most frequently asked questions about this topic. If you’re considering debt discharge through bankruptcy, keep reading to find out more about debt discharge and whether it is right for you…
What Is Debt Discharge And How Do I Qualify?
Debt discharge involves wiping out a person’s debt through the process of bankruptcy. When a person’s debts are discharged through debt settlement law, the person is no longer required to pay back their lender.
In order to have your debt discharged, you must first file for bankruptcy. During the process of bankruptcy, a judge will determine whether to discharge your debts. Debt is handled differently in each type, or chapter, of bankruptcy. A debt may be canceled completely, usually with chapter 7 bankruptcy, or restructured, as with chapter 12 or 13 bankruptcies.
To qualify for debt discharge, you must complete all required steps of the bankruptcy process, such as taking financial courses. An experienced debt discharge lawyer can help you understand which type of bankruptcy you should file for and ensure that you’ve properly completed all of the bankruptcy requirements.
What Debts Are Eligible To Be Discharged?
Not all debt can be canceled through bankruptcy. Whether certain debts are subject to debt discharge may depend on the type of bankruptcy. Examples of debts that are usually not eligible for debt discharge include taxes, child support, criminal fines, and some student loans.
However, most other debts can be canceled through bankruptcy, such as medical or credit card debt. A debt discharge lawyer in the Sacramento, CA, area can help you determine which of your financial debts can be discharged and which may not qualify.
What Are The Advantages Of Debt Discharge?
The benefits of bankruptcy to someone who is deep in debt can be huge. For many people, debt discharge may feel like a heavy weight has been lifted off their shoulders.
The biggest benefit is that you no longer have to worry about your debt or making payments. What’s more, debt settlement law forbids your creditors from harassing you through phone calls, emails, and letters.
After filing for bankruptcy and having your debt canceled, you can start over with a clean slate. Although it may take some time, debt cancellation can help you improve your finances after discharging your debts.
Once you’ve built your credit back up, you will have more financial options available to you to meet your goals. For example, you might have a better chance of qualifying for a mortgage loan so you can purchase a home.
What Are The Disadvantages Of Debt Discharge?
Despite some major benefits, there are some drawbacks to debt discharge. For starters, your credit could take a major hit when you file for bankruptcy, and it may be difficult for you to secure other loans for a while afterwards. It can take months, or even years, to build your credit back up.
In addition, sometimes debt discharge can cause the person to owe taxes on their debt that was canceled. When you are already struggling financially, this can be a big deal.
If you’re considering debt discharge through bankruptcy, you should speak with a debt discharge lawyer to see if debt cancellation could impact your taxes. A financial freedom attorney can also help you explore alternatives to debt discharge through bankruptcy.
Is Debt Discharge Right For Me?
While debt discharge has some major benefits, it’s not right for every person who is in debt. Whether debt discharge through bankruptcy is right for you depends on many factors, such as:
- How much debt you have, and your debt-to-income ratio
- What type of debt you have
- Whether you can make your minimum payments
- If you are still able to cover your other expenses, such as food and housing
- And more…
If you’re considering discharging your debt through bankruptcy, it’s a good idea to consult with a professional debt discharge lawyer. They can help you understand bankruptcy’s impact on your finances after discharging your debts.
Speak With A Financial Freedom Attorney Today
For more information about debt discharge and whether it’s right for you, contact The Law Offices Of Diane Anderson today. One of our skilled debt discharge lawyers in the Sacramento, California, area will be happy to answer your questions. You can reach our Folsom office at (530) 317-5556 or our Jackson office at (209) 881-9222.