What can't bankruptcy fix?

Debts it can’t end

The survivors’ list, covered fully in Which debts does bankruptcy erase, and which survive?: child support and alimony, recent income taxes, most student loans absent the extra hardship case, criminal fines and restitution, DUI injury debts, and debts procured by fraud when the creditor proves it. If your problem debt is on that list, bankruptcy may still help by clearing everything around it, but go in knowing the difference.

Deals it can’t rewrite (much)

The discharge erases your personal promise; it doesn’t erase liens. Keeping mortgaged or financed property means paying for it. Chapter 13 can restructure impressively at the edges, curing arrears, cramming down qualifying car loans, but the first mortgage on your home keeps its rate and balance, and nothing in any chapter makes an unaffordable house affordable. “There is no free house and no free car in bankruptcy” is the sentence to carry out of this page.

People it can’t protect

Your discharge protects you. A cosigner, a co-borrower spouse who didn’t file, the parent on the car loan: collectors turn to them the day your protection starts. Chapter 13 softens this with its co-debtor stay while the plan pays the debt; Chapter 7 doesn’t. If protecting a cosigner matters to you, say so at the consultation, because it genuinely changes the strategy.

The past it can’t undo

Bankruptcy takes the world as it finds it. The 401(k) already cashed out to pay cards is gone. The house already sold at foreclosure is sold. Money already garnished mostly stays garnished (with the useful 90-day exception). Transfers to relatives don’t hide assets; they create problems. All of which compresses to one piece of advice: get informed before acting, because the most expensive moves are the ones made in the six months before anyone talked to a lawyer.

The life it can’t build

The discharge clears debt; it doesn’t raise income, lower rent, or make a budget balance that never balanced. People whose core problem is chronic shortfall sometimes discharge everything and slide back within a few years, and the eight-year limit between Chapter 7 discharges makes that a costly loop. The best filings pair the fresh start with a change that makes it stick, which is exactly what the Checkup’s non-bankruptcy results and the Alternatives section are for.

The bottom line

None of these limits is a reason to fear bankruptcy; they’re the reason to aim it. It ends collectible debt and stops collection, brilliantly. Match the tool to a problem with that shape and it delivers; expect more and it can’t.