Bankruptcy’s Effect on Pending Lawsuits, Vehicles, Student Loans and More

effects of bankruptcy

Many people who come into our offices have questions about bankruptcy’s effect on specific debts. Every case is unique, and several factors influence whether specific debts are eliminated or reduced.

The following is a list of commonly held debts and explanations of how they are typically, but not always, affected by bankruptcy:

Vehicle loans: Auto loans are secured debts. If your payments are current, however, we can likely arrange for you to keep your vehicle.

Pending lawsuits: Pending lawsuits must be disclosed as assets in bankruptcy. A trustee will then determine whether the potential proceeds should be paid to your creditors. However, we may be able to exempt the value of the lawsuit so the trustee cannot go after the proceeds.

Student loans: In most cases, student loan debt cannot be discharged. However, you may be able to adjust your payment plan. We will help you understand whether filing for bankruptcy would eliminate other debts, making it possible to afford your student loan payments.

Child support and alimony: These cannot be discharged in bankruptcy.

Tax debt: Generally, old federal and California income tax debts can be discharged. It is important to talk to your bankruptcy attorney about whether you qualify for the elimination of tax debts.

If you have specific questions, you can schedule a complimentary consultation or by calling 1-925-264-9083.