About Bankruptcy and Debt Relief
Bankruptcy is a legal process that allows individuals or businesses to reorganize their debts and potentially eliminate some of them. However, it's not the same as a debt-free state.
Debt relief refers to the process of managing your debts and creating a plan to pay them off over time. This can be especially helpful for individuals who have experienced bankruptcy or are struggling with debt.
The Difference Between Collections and Bankruptcy
When it comes to collections and bankruptcy, there's often confusion between the two. Here's a key difference:
- Bankruptcy is a legal process that allows individuals or businesses to reorganize their debts and potentially eliminate some of them.
- Collections are written off as a way to pay off debts, usually in an effort to avoid lawsuits or other creditor actions.
Do You Have To Pay Back Debt After Bankruptcy?
In most cases, yes. When you file for bankruptcy, the court will approve a plan that outlines how you'll manage your debts and pay them off over time. If you don't comply with this plan or ignore creditors' demands to repay debts, they may take action to collect the debt.
However, there are some exceptions. If you have a tax debt or owe money to the government for a specific reason (such as back taxes), you might be able to discharge the debt during your bankruptcy filing process.