5 Common Financial Problems Bankruptcy Can’t Fix

As a Newnan, Georgia (GA) bankruptcy lawyer I’ve been privileged to work with hundreds of people who now have a fresh financial start and no longer feel the stress and worry associated with debt problems. Occasionally, however, I meet someone that I just can’t help. Often, they have one or more of these 5 problems.

  1. Student Loans – you have almost no chance of eliminating student loan debt in a bankruptcy case.  To be sure there are very sound policy reasons to make student loans non-dischargeable (meaning you can’t get rid of them), but unfortunately when the expectation of a high salary to pay off student loans doesn’t materialize, people can find themselves in a hole with no way out.
  2. You have tax problems not related to property– there is an occasional opportunity to eliminate tax problems in a bankruptcy case, but the opportunities are few and far between. And if the problems are related to sales or employee withholding taxes – well a tax lawyer is likely in order.
  3. You have financial obligations ordered in a divorce decree or other order by a judge in a divorce proceeding – The bottom line is that if the judge orders you to pay something in a divorce proceeding, pay those obligations first if you must make a choice and let the things go (credit cards) that a bankruptcy can resolve.
  4. You have large unsecured debts (usually credit cards) and a large amount of equity in a home – The exemption for a primary residence only covers $10,000 ($20,000 for a joint case). If you have a large amount of equity in your home that cannot be covered with the exemption, then your home would likely be sold in a chapter 7  case, and if you can’t properly make bankruptcy plan payments for a chapter 13 case, you left are with a difficult situation at best.
  5. You acquired large recent debts and you need to file quickly. Debts not used for necessities that were acquired within 6 months of filing a bankruptcy case are often problematic. In these situations, the creditors can make the argument that your use of credit was fraudulent and therefore you should not be allowed to eliminate their debt. I know it can be tempting to use the credit cards when it seems there is no other option, but you may be playing with fire.

Now you may file a bankruptcy case if you have any of these problems and the bankruptcy case will eliminate your other financial issues. So often it still makes sense to move forward with a case. Your best bet is to contact a Newnan bankruptcy attorney so that you may clearly understand all of your options. We are always happy to meet with you for a free 1 hour consultation.


by Rick Palmer

Leave a Reply

Your email address will not be published. Required fields are marked *