NEW YORK, NY / ACCESSWIRE / September 23, 2024 /, 2024 / While many people think bankruptcy is an opportunity to clear all their debt with a chance for a clean slate, it's important to realize that bankruptcy is complicated and some debts cannot be discharged.                  
This article will uncover how bankruptcy works and some debts and loans that cannot be cleared. We'll also look at some alternatives to bankruptcy, including personal loans, that you can employ that may be able to help you erase your debt.
How Does Bankruptcy Work?
Bankruptcy is a legal process that takes place in federal Bankruptcy Court that allows individuals who cannot repay their debt to most likely eliminate it. It's important to understand there are two types of bankruptcy available to individuals. If you decide to file, you'll have to choose between Chapter 7 and Chapter 13 bankruptcy. Through Chapter 7, liquidation occurs with the sale of the debtor's nonexempt property and the distribution of proceeds to creditors. With Chapter 13, a reorganization of debts occurs for an individual with regular income - in most cases, you retain your assets, but you'll need to pay your debts back over a period of time, usually 3-5 years.
With these two types of bankruptcy, the court can discharge certain debts. When this happens, a creditor, in most cases, cannot act against the debtor. However, it's important to remember that not all debts can be discharged. Some are very difficult to discharge.
Loans and Debts That Can Be Discharged Through Bankruptcy
Many unsecured loans can be discharged through bankruptcy. Unsecured personal loans are those that are not backed by collateral. These loans include personal loans and loans from friends, family, and employers.
Debts that can typically be discharged include:
Credit card debt
Debt in collections
Medical bills
Utility bills
Some civil court fees
Some attorney fees
Revolving charge accounts
Debts That May Not Be Cleared Through Bankruptcy (In Most Cases)
While the specifics of what can and cannot be discharged in bankruptcy varies depending on your situation and the specific bankruptcy chapter you file, the most common types of debt that cannot be cleared include:
Alimony and child support
Unpaid taxes and tax liens (some federal, state, or local taxes may be discharged if they go back several years)
Debts for willful and malicious injury to a person or, in some cases, property. (In Chapter 13 bankruptcy, debts for property damage may be able to be discharged.)
Debts for death or injury caused by a drunk driving incident
Debts from fraud
Debts that were not listed in the bankruptcy filing
Alternatives to Filing for Bankruptcy 
There are a few alternatives available to help alleviate overwhelming debt, including:
Consolidate credit card debt - Consolidating credit card debt into a balance transfer credit card or a loan with a lower-interest might be a good option if you have a lot of credit cards with high interest.
Consider increasing your income - Getting a second job temporarily or taking on gig work like food delivery or ride-sharing could be a good way to pay down some of the debt. You can also look into asking for overtime or working toward a promotion at your current job.
Talk to your creditors - If you find it difficult to keep up with the payments, talk to your creditors. They may be able to offer you a payment plan with lower monthly payments.
The Bottom Line
Filing for bankruptcy can cause a drop in your credit score and remain on your credit report for years. But this doesn't mean that bankruptcy is always bad. Sometimes it is the best option. After all, falling behind on payments can also damage your credit score.
Before you file, take some time to consider whether there's a better option for you, one that will allow you to pay down your debts without causing damage to your credit score. Once you've researched all your options, you'll have a clear idea about whether bankruptcy is best for you.
SPONSORED CONTENT
CONTACT:
Sonakshi Murze
Manager
[email protected]
SOURCE: OneMain Financial