As I was explaining in an earlier blog, bankruptcy mostly comes in “cans”, meaning that there are many forms of debt relief that bankruptcy can help with. During my almost twenty five years practicing bankruptcy law in Indiana, I myself have been impressed with just how much help can come out of a bankruptcy. Bankruptcy is truly a powerful tool, but, as with any tool, it can’t be used recklessly, and amateurs need professional help using the tool.
The bankruptcy “tool” is designed to help eliminate unsecured debts. That’s the kind of debt where the creditor does not have a lien on property to back up the loan. Bankruptcy can even help with obligations like child support and alimony. While everyone knows you’re essentially expected to live up to those obligations, bankruptcy can help you catch up if you’re behind with the payments. The same is mostly true of student loans. In a Chapter 13 bankruptcy, the student loans can be included in the plan, so you can pay them off over time.
Missed mortgage payments and missed car loan payments can also be part of a repayment plan under a Chapter 13 bankruptcy. Chapter 7 usually does not help with missed payments on a mortgage or a car loan.
The bottom line is that bankruptcy, just like any other tool, cannot fix every problem for every debtor. From my point of view as an indiana bankruptcy attorney , the sooner in the process a client sits down with me and goes over all the facts and all the possible strategies, the more help I am going to be able to provide.
Bankruptcy does come mostly in “can’s”, as I like to say, but there are some “cannots” in there as well.