When filing bankruptcy, it is common to wonder which creditors will be included in the filing. Related to this, it is also very common to wonder how various loans will be treated or resolved. In certain circumstances there may be a specific creditor that you do not wish to discharge a debt with. Similarly, there may be a specific loan, such as a mortgage, car loan or retirement account loan that you do not wish to discharge either. One of the many benefits of the bankruptcy process is that it does not require you to treat all debts in exactly the same way; herein we shall examine a few of the ways in which this principle is observed.
First, with regard to which creditors are included in the bankruptcy process, the answer is generally - all of them. However, this does not mean that each creditor will be treated in the same way, or even that every debt owed to a specific creditor must be treated in the same way. For example, in many instances a secured debt (such as a car loan or home mortgage) may be preserved, with payments made as the bankruptcy is ongoing and continuing afterwards after the discharge has taken place.
This can allow someone who is going through the bankruptcy process to keep their home and vehicle, regardless of whether they may be subject to a mortgage or an auto-loan. Conversely, unsecured debts (such as most types of credit cards, personal loans, lines of credit or medical bills) will all be subject to the automatic discharge which takes place at the end of the bankruptcy process, extinguishing any personal liability that you may have towards them.
There may be also be some debts that lie outside the secured-unsecured dichotomy, such as a student loan, or tax debt. In either instance, these debts would still be listed in the bankruptcy but will not necessarily be included in the discharge. However, depending on the chapter of the bankruptcy that is filed and the route pursued therein, these debts may still be mitigated or resolved in other ways, such as in a Chapter 13 filing wherein recent taxes can be paid back over the course of a Chapter 13 plan. In speaking with your attorney, they will advise you on the different ways in which specific loans may be addressed through the bankruptcy process.
Fundamentally, bankruptcy exists to offer you protection from creditors. Because of this, any creditors that you might have at the time of filing must typically be included in the bankruptcy process to ensure that you are fully protected while the bankruptcy is ongoing. However, this does not mean that all of these individual debts must be treated in the same way.
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