What bankruptcy can't do

Bankruptcy can’t cure every financial problem, nor is it the right step for everyone. 

In bankruptcy, it is usually not possible to:

  • Eliminate certain obligations to “secured” creditors.  A “secured” creditor is a creditor that can take something (called “collateral”) if the debt is not paid as agreed.  Common examples are car loans and home mortgages.  You can force secured creditors to take payments over time in the bankruptcy process, and bankruptcy can eliminate your obligation to pay more money if your property has been taken.  But, you generally cannot keep the collateral unless you keep making payments on the debt.
  • Discharge certain debts singled out by the bankruptcy law for special treatment, such as child support, alimony, certain other debts related to divorce, most student loans, court restitution orders, criminal fines, and some taxes.
  • Protect co-signers on your debts.  If a relative or friend has co-signed a loan, and you discharge the loan in bankruptcy, the co-signer may still have to repay all or part of the loan.
  • Discharge debts that arise after bankruptcy has been filed.

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