Filing for bankruptcy is a hard decision. It forces you to confront your financial condition, and is a humbling experience. Before you consult an attorney, you should know how filing for bankruptcy could affect you:

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1. Student Loans Usually Aren’t Discharged

Student loan debt in the United States recently topped $1 trillion. This includes private student loans and federal student loans. As millennials are having a hard time find well-paying jobs, interest on their student loans grows at a heart-stopping rate. This causes many young people to start considering bankruptcy before age 40. Unhealthy financial habits–taking out too many student loans, bad money management, and growing credit card debt–contribute to this epidemic.

Unfortunately, filing for bankruptcy isn’t an option if you want to discharge your student loan debt. Student loan debt can be discharged in a small number of rare situations. Doing so is very difficult because it requires the petitioner filing for bankruptcy to overcome big hurdles that would convince the court to discharge the student debt. So even if you file for bankruptcy, your student loan debt will most likely stick around.

2. Filing For Bankruptcy Stops Creditors From Harassing You

This is the main reason why some people file for bankruptcy. Chances are, if you are filing for bankruptcy, you receive many harassing letters or phone calls from debt collectors. Debt collectors can be an intimidating bunch. They call at all hours of the day and night and threaten you to “pay up, or else.” Sometimes, people choose to file for bankruptcy after being served with a lawsuit. Filing for bankruptcy will stop a lawsuit in its tracks…at least temporarily.

When you file for bankruptcy, debt collectors must stop calling you and harassing you about a debt you may owe. All lawsuits against you must also pause. This is called the “automatic stay” of bankruptcy. If a debt collector wants to collect, then the must go to the bankruptcy trustee and get in line with all of the others trying to collect from you. If a debt collector tries to collect from you when you benefit from the automatic stay,” the court will fine them heavily.

However, the automatic stay is not fool-proof. Even after filing for bankruptcy, the court may let some creditors collect. Creditors can ask the court to be “excepted” from the automatic stay. If the court agrees with the creditor, then they can continue pursuing the debt you owe them.

3. Filing for Bankruptcy Won’t Prevent You From Paying Child Support or Alimony

Child support or alimony can hit the checkbook hard every month. But, filing for bankruptcy won’t end your responsibility for paying child support or spousal support.

The reason behind this is simple. When Congress decides which debts can be wiped away after bankruptcy, they try to balance interests of the person filing for bankruptcy, the interests of the creditors, and the interests of the government. The idea behind child support and alimony is to prevent a spouse or your children from having to rely on welfare after a  divorce. Plus, every parent has a duty to support their child. Child support won’t go away until the children grow up and reach the age of majority (which is age 18 in most states).

Your child support and alimony payments may reduce payments to creditors under Chapter 13. A Chapter 13 bankruptcy is where you are on a payment plan. Once you complete the payment plan, your debts are discharged. Payments under Chapter 13 look at all your payments–including child support and alimony. Support payments tend to reduce how much you pay other creditors under Chapter 13.

4. You Probably Get to Keep Your Home

When you file for bankruptcy, you can usually keep your house. This is known as “homestead exemption.” This is another public policy example. Congress does not want people filing for bankruptcy to then be without a place to live. Also, the government want to penalize you when you file for bankruptcy. You have a constitutional right to file for bankruptcy. Congress doesn’t want to force people onto the streets for exercising a constitutional right. Under the homestead exemption, a filer can keep a house up to $59,100 in equity.

The homestead exemption covers several other things. You won’t be told to sell family heirlooms or household goods. You also get to keep a vehicle.

5. If You Get Child Support or Alimony, It’s Exempt

Just like with a house, the law won’t take away certain things from people filing for bankruptcy. Child support and alimony payments are safe when you file. If you receive these payments, you won’t have to immediately hand them over to the trustee or your creditors. If you get a pension after you retire, it won’t be taken away from you. The law doesn’t want to penalize someone for filing for bankruptcy by forcing them to hand over the pension they worked hard for.

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