(The following is not legal advice. For legal counsel regarding your situation, please consult an attorney licensed in your state).
The most widely held misconception about bankruptcy is that its the debtors version of the get out of jail free card in Monopoly. While most people know that bankruptcy affects your credit for 7 to 10 years, very few people know that its possible that youll have to pay back the debt anyway, even if you file a Chapter 7 straight bankruptcy. The formal definition of bankruptcy is a proceeding in federal court in which an insolvent debtors assets are liquidated and the debtor is relieved of further liability. On the other hand, the commonplace definition of bankruptcy is probably the process of completely wiping out your debts for free. In the majority of cases, the latter definition may be appropriate, but in some scenarios, its likely that even with bankruptcy, youll still have to pay back at least a portion of the debt.
So when is it likely that youll have to pay back your debts? Here are the most common scenarios when youll get all the negatives of filing bankruptcy (severe credit impact for 7 to 10 years), but none of the benefits...
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