Bankruptcy is not an all-time cure for financial burdens and it is not for everybody. This is why it is important to do your research or seek legal advice first prior to submitting your bankruptcy application. Although bankruptcy can help discharge or wipe out most of your debts, it cannot do the following:
Bankruptcy can’t eliminate secured creditors from taking the mortgage or lien on a property as their loan collateral. Bankruptcy can only remove your obligation to give any more payments once your property has been seized but the only way for you to keep the collateral is to continue paying creditors what you owe.
The Bankruptcy law states that you are still legally responsible to pay for the following debts even if you apply for bankruptcy: child support, alimony, student loans, taxes, and fines related to criminal activities or convictions.
Bankruptcies can’t offer guaranteed protection for loan cosigners. If you applied for a loan and asked a relative to cosign, then even if your debt gets discharged through bankruptcy, the creditor may still go after your relative and demand for payment.