Are you struggling to keep up with your mortgage payments? If so, you may be wondering if filing for bankruptcy could help. Unfortunately, bankruptcy is a complex process, and knowing which type is best for your situation can be difficult without a bankruptcy attorney. Here's a closer look at the different types of bankruptcy, what can and cannot be written off in bankruptcy, and what it means to reaffirm a debt.

Are There Different Types of Bankruptcy?

There are two main types of bankruptcy available for individuals in the United States: Chapter 7 and Chapter 13. Chapter 7 bankruptcy eliminates most debts by liquidating assets, while Chapter 13 reorganizes debts into an affordable repayment plan. The main difference between the two is that while both wipe out all unsecured debt, like credit cards, personal loans, and medical bills, Chapter 13 allows you to keep some of your property, like your house or car, in exchange for making regular payments on your remaining debt over three to five years. Again, your bankruptcy lawyer can help you determine which option is best for you.

What Can and Cannot Be Written Off in Bankruptcy?

When filing for bankruptcy protection, it's important to understand what can and cannot be written off in the process. As stated above, most unsecured debts are discharged in both a Chapter 7 or 13 bankruptcy. However, certain types of debt cannot be discharged through filing, including child support, civil judgments, or tax debt. Student loans are a 'gray area' and typically not dischargeable except under extreme circumstances. If you have student loans, talk to your bankruptcy attorney about your options.

Additionally, if you want to keep your house or car after the bankruptcy, your mortgage or car loan will need to be reaffirmed.

What Does It Mean To Reaffirm A Debt?

Reaffirming a debt means that you are agreeing to remain liable on the loan even after filing for bankruptcy protection. This usually occurs when an individual wants to keep their car or home after filing for bankruptcy protection but does not have enough money available to pay off the loan balance in full. When this happens, you must sign a reaffirmation agreement with your lender, which states that you will continue making monthly payments until the loan is paid off completely.

Filing for bankruptcy can seem overwhelming, but having an experienced bankruptcy attorney by your side can help. If you think filing for bankruptcy might be right for you, consult a bankruptcy attorney today.