Will Bankruptcy Erase All My Debt?

can you file bankruptcy twice, it depends

Firstly, declaring bankruptcy is a serious matter, and the decision should only be made once you have consulted with a professional.

This course of action is not reversible, and there will be a permanent record of this.

Filing for bankruptcy can affect your ability to get credit in the future, so be cautious when considering this option.

While bankruptcy can remove remaining debts, there is no guarantee there are several debts that you will still be accountable for.

If you consider a financial decision to consolidate your debt, always contact professionals to help you make the right decision.

What Happens When You File Bankruptcy: What Bankruptcy Can’t Do?

What is bankruptcy? Bankruptcy is not an answer to every problem. A bankrupt person does not need to have any collateral in case of foreclosure.

The bankruptcy release is beneficial but does not cure debtors or liens. A lien enables the lender to take possession, sell this to the public and apply this money to the credit balance.

Bankruptcy can be used as an alternative to a debt secured by a mortgage or other property. But the creditors may still recover their property.

Although bankruptcy is intended to put your debts behind you so you can continue your life, not all debts qualify for discharge.

What debts cannot be eliminated in bankruptcy?

Bankruptcy is not a one-stop-shop to fix all of your credit issues. While most of your debt is removed, there are a select few that do not get removed.

Secured debt

Purchasing an item on credit from a financial lender means that you have entered an agreement with the lender in exchange for using the said item.

When you file for bankruptcy, you will need to decide whether you would like to continue using the item and pay creditors for it or whether you are willing to return the item to relinquish the debt.

Child support and alimony

This is another debt that you cannot relinquish or abscond through bankruptcy.

If you fail to adhere to this, you could end up in bankruptcy court, which is not where anyone wants to be.

Any amount outstanding for child support and alimony at the time of bankruptcy is still owed and must be paid.

Legal fees and debt in a divorce decree

It is common in the case of a divorce that one of the spouses agrees and pays for the fees accrued for legal expenses. The spouse may pay some of the debts, but that is all subject to an agreement.

This type of debt will continue to be owed after declaring insolvency.

An example would be a spouse that has agreed to pay the balance on both spouses’ credit cards and then declares bankruptcy. This would not wipe the debt owed on the card. The spouse who agreed to pay will need to honor the repayment obligation.


If there is court-ordered restitution, bankruptcy cannot help. In addition, any outstanding amount owed for causing anything such as personal injury or loss of finances to another person cannot be undone.

Debt Relief Alternatives To Bankruptcy

Bankruptcies often have serious implications.

Bankruptcy can stay on your bank account for up to seven years, and an unsecured bankruptcy for up to ten more years.

This makes borrowing cash more difficult and, in some cases, impossible. In addition, it may impact your premiums, such as paying a higher rate on a car loan.

Also, you should consider other forms of debt relief before committing to bankruptcy. In general, debt relief means negotiations with creditors to reduce their interest rates and pay off the debt owed.

What Happens When You File For Bankruptcy: What Can Bankruptcy Do?

Bankruptcy gives people facing financial problems the option to end their debts.

Both main bankruptcy types — unsecured and non-voluntary bankruptcy — have different advantages and sometimes treat debt and property differently.

Filing for personal bankruptcy can solve your financial situation by clearing compulsory payments. However, note that some secured and unsecured debts might not be wiped away by declaring insolvency.

The Bottom Line

If you discharge all your debts through bankruptcy, it will severely impact your credit score, so you should take this very seriously.

If you can’t pay all your creditors, you may consider filing bankruptcy. The bankruptcy process can wipe out most of the unpaid debts you have.

Note that not all debts will be wiped and that you still have a legal obligation to pay any of the outstanding debts that remain after filing.