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What Bankruptcy Cannot Accomplish

Posted on in Bankruptcy

Many people benefit from a well-structured, rightly timed bankruptcy filing. While bankruptcy can give individuals some closure on many different debts and provide a fairly blank slate from which you may build a better financial foundation, there are limits to what bankruptcy can do for you. Knowing these limits is useful in giving people accurate expectations before they file for Chapter 7 or Chapter 13 bankruptcy.

What Types of Debts Are Not Dischargeable?

In the context of discussing what bankruptcy is not able to do, the most important consideration is the debts that will stay with you even after you have received a discharge in bankruptcy. Here are some common examples of these debts:


Tax Refunds and Bankruptcy

Posted on in Bankruptcy

Will Filing For Bankruptcy Effect My Tax Refund?

Those who file for Chapter 7 or 13 may be able to keep their tax refund, however, whether or not you can keep it depends on the prebankruptcy precautions you take to protect your refund. If you have already filed for bankruptcy, will the trustee assigned to your bankruptcy case take your refund? Is your tax refund safe at any point if you will file for bankruptcy before the year is over?

This blog will answer those and other questions you have about taxes and personal bankruptcies.

If I Want to Keep my Tax Refund, When Should I File for Bankruptcy?

It may be a good idea to file bankruptcy after you have received your tax refund. In fact, you may want to use a portion of your tax refund to pay for the costs to file bankruptcy. That is not uncommon. You also may want to spend your tax refund on other necessary expenses, such as food, shelter, or transportation. If you decide to go this route, don't forget to keep receipts showing how the money was used.


Understanding Chapter 13 Bankruptcy

Posted on in Bankruptcy

If your personal financial situation has you considering filing for bankruptcy, you should know about your two options: Chapter 7 and Chapter 13 bankruptcies. Chapter 7 bankruptcy, sometimes referred to as 'straight' bankruptcy, is an effective way to wipe most of your debts clean in a matter of months, but there are several drawbacks to this type of bankruptcy. The largest caveat with Chapter 7 bankruptcy is that many people do not legally qualify for Chapter 7. Therefore, Chapter 13 is the only option for many personal bankruptcy filers. However, sometimes Chapter 13 is the better choice for many even if they qualify for Chapter 7.

What's Unique About Chapter 13?

The main differentiator between Chapter 13 and Chapter 7 is that under Chapter 13 bankruptcy, you will enter into a payment plan with your creditors. The plan, which is overseen by a bankruptcy trustee, almost always lasts between three and five years.The good news for you is that you might not even be liable for the full debt amount. An experienced bankruptcy attorney is often able to negotiate down the amount you owe. For these reasons, Chapter 13 bankruptcy is sometimes called 'debt reorganization.'

Another attractive feature of Chapter 13 bankruptcy is that you are allowed to keep valuable and essential property such as your house and vehicle. Some types of property valued at certain amounts are exempt from being seized during a Chapter 7 filing, but you will have much more security for your property and assets under Chapter 13. So, if you are interested in keeping your house, Chapter 13 is usually the optimal route.


When you decide to file bankruptcy, you will have a trustee assigned to your case. The trustee takes on a number of important tasks and administers your case. Their goal is to assess your circumstances, ensure that you are not hiding property, manage the property in the bankruptcy case, and manage payments.

Who Is the Trustee?

Trustees are appointed by the courts. Trustees are typically accountants or lawyers.

Trustees in Chapter 7 Bankruptcies

In a Chapter 7 bankruptcy, the ultimate goal is a discharge of all qualifying debts. The trustee is expected to be impartial throughout the process. They receive a small fee for their services, as well as a percentage of any property sold. This serves as extra motivation to find property that people who file bankruptcy may try to hide.


Maybe you've decided that bankruptcy is the right choice for your family. What's your next step? This step-by-step guide outlines what to expect throughout the bankruptcy process and what your responsibilities are along the way.

Step 1. Discuss Bankruptcy Options with An Attorney

Though you can represent yourself, bankruptcy cases can be incredibly complicated. For that reason, I always recommend that you hire an attorney. Depending on your income level and the amount of debt you have and your assets, you can choose Chapter 7 or 13 bankruptcy. It's important to discuss these options with a lawyer, since Chapter 7 and 13 have their own specific requirements, and each provides different benefits. While a Chapter 7 bankruptcy allows for a full discharge of debt without any repayment, a Chapter 13 bankruptcy permits you to keep some of your assets while making monthly payments.

Step 2. Get Your Documentation to Your Attorney

Your attorney will let you know what is needed to proceed with bankruptcy. You will be expected to provide information on your household income, credit card debt, secured debt, assets, and investments. Most attorneys will also need you to complete a questionnaire.

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