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Bankruptcy may be a debt solution, but it doesn’t mean that all your debts are forgiven without some conditions. In many cases, especially with Chapter 7 bankruptcy, some debts continue past bankruptcy, which is why the legal team at O’Neill Law Firm, LLC in La Crosse, WI, stresses the importance of understanding the difference between secured and unsecured debts. How much you have of each can have a significant impact on how your bankruptcy plays out, and it’s important to understand when planning your strategy with a bankruptcy attorney.

Secured Debts

Assets are often the cause of many debts. They’re tied to loans and financing an individual can’t pay, and also come in the form of liens when dues aren’t paid. These are known as secured debts, as they’re attached to an asset. Mortgages and auto loans are common secured debts in bankruptcy, as well as tax liens when you haven’t filed or paid income tax for several years.

bankruptcy-attorney-oneill-law-firm-llcWhen you file for bankruptcy, if you are behind on payments to a secured debt, the creditor can usually repossess the property or asset to compensate for their losses. However, if your payments are up to date, you can turn the property over to fully eliminate the debt. There are several other options to explore, including Chapter 13 bankruptcy, so consult with a bankruptcy attorney before making any decisions.

Unsecured Debts

Unlike secured debts, unsecured debts have no collateral. Student loans, credit card bills, back taxes, and medical bills are some of the more common examples. Many unsecured debts are wiped from the slate in bankruptcy, but several very important ones may remain.

Student loan debt, for example, and unpaid taxes are almost never forgiven, meaning you’ll be required to continue paying. Likewise, these agencies may be able to come after other assets if it seems certain you’ll never repay the debts.

Filing for bankruptcy takes considerable financial assessment and consideration, which is why it’s best to work with a bankruptcy attorney. The legal team at O’Neill Law Firm, LLC has extensive experience with bankruptcy cases and can help you find a solution to overwhelming debt. Call (608) 519-3551 today to schedule a consultation and visit their website and Facebook page to learn about the services a lawyer can provide.

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