Bankruptcy is a last resort in dispatching debt and starting over with a clean slate of not owing money that you cannot repay – mainly unsecured credit card debt.  But what debt is eligible for bankruptcy elimination?

Unsecured credit.  This category is mainly credit cards, but can also include other unsecured personal loans.  These creditors stand to lose the most if you file for bankruptcy.

Auto loans.  Your vehicle loans can be eliminated in bankruptcy court, but you must surrender the car at the end of the process.  If your auto has already been repossessed, then that part of the remaining loan can be wiped out.

Home loans.  Mortgages can be eliminated in bankruptcy as well, but you will lose the house in the process.  In a divorce this can be a sticky situation.  Make sure that the divorce decree assigns the house over to one or the other parties and that there is a provision for what happens if that party defaults on the payments.  If this happens after your bankruptcy occurs, then you will be on the hook for the balance of the mortgage less the proceeds from the sale of the residence.

Personal secured loans.  Any loans that are secured with property or other means can be dispatched, but you will have to give up that property that you placed in lieu of getting the loan.

Medical bills.  Medical bills can be wiped out with bankruptcy.  This includes any money owed to hospitals, doctors or other medical professionals.  That is one reason that these organizations prefer that you make payments via not only your health insurance, but other loan methods so that it takes them out of risk of losing the money.

Types of debt not affected by bankruptcy.  There are loans that you cannot get rid of in bankruptcy.  These include any federal loans, student loans or back-taxes owed.  You will still have to pay these back, so it is best to make plans to get them paid off as soon as you possibly can.

Going through bankruptcy is a messy and mentally taxing event.  You will need to hire an attorney to represent you because unless you are a lawyer, you will find it too complicated and time consuming to perform on your own.  This plus the fact that you do not know enough of the procedures to know what little tactics you can use to navigate the process properly and in the easiest manner possible.

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