Can bankruptcy dispose of all of my debt?

One of the most common misconceptions about bankruptcy in Louisiana is that it can clear all debts you owe. Bankruptcy can help dispose of many types of debt, but there are some obligations that it cannot reach. 

Understanding what bankruptcy can and cannot address may help you evaluate your options. 

Debt bankruptcy can resolve

As US Courts’ bankruptcy guide explains, most types of debt that you did not secure with collateral will be appropriate for bankruptcy. This includes most personal loans, credit card debts, outstanding bills, medical bills, business debts and overdue taxes. 

Remember to list all of your debts when you apply for bankruptcy as courts will not dispose of any debts you leave out — even if these debts otherwise would qualify. Also do not claim debts that belong to another party during bankruptcy as this can complicate things for you later if you decide to dispute them. 

Debt bankruptcy cannot resolve

Bankruptcy will not address most secured debts, such as mortgages and debts that have collateral. It will not relieve you of any obligation to pay your recent or current taxes, and you will still have to pay fines or fees associated with criminal charges or court orders. This means that fines a court imposes as a sentence will still be your responsibility after bankruptcy, and you will still have to pay child support, alimony and other obligations a court has already ruled on. 

You will also still need to repay student loans in most cases, but there are exceptions to this. If you can demonstrate that you have faced undue hardship, such as an accident or disability that prevents you from repaying your loans, you may be able to convince a court to dispose of them. You will need to demonstrate that you have made a good-faith effort to repay your loans and are unable to do so. You may also have a claim if the school or loan provider engaged in deceptive practices or treated you unfairly.