Will bankruptcy remove debt owed to collection agencies?

Answer 1

The answer below may apply in USA legal jurisdiction.

Different States (i.e. sovereign legal jurisdictions) have their own laws.

So, for example, if you are in China, I am sure the answer below does not apply.

But, if you happen to live in USA, well, you are bankrupt anyway you care to figure it.

Take the money and run!

Good luck....

There are two different forms of Bankruptcy, chapter 7 and 13. A chapter 7 will wipe the slate clean but anything you include the creditor can take back and sell it to pay the bill. Basically they can repo aything included. A 13 you go to court and the creditors usually will let you keep your stuff and you aagree to a set amount you can afford to pay back creditors on a monthly pay plan.

A chapter 7 will allow the filer to discharge all debts that allowed under the federal or state filing whichever one is used. Secured debts such as homes and vehicles are not subject to discharge and the lending agreement must be reaffirmed with the lender if the debtor wants to keep the property. BK exemptions such as the homestead exemption are used to protect against the forced sale of the debtor's personal and real property. Spousal maintenance (alimony), child support, tax defaults and certain types of lawsuit judgments are not dischargeable in a chapter 7.

A chapter 13, is a consolidation/repayment BK the debtor files a repayment plan with the BK trustee who will decide if the filing will be allowed. Under this plan the debtor is allowed to keep all personal and real property unless the lender is allowed by the BK court to be excluded from the plan. If this happens the lender may pursue litigation, foreclosure or any other allowable collection procedures.

Answer 2

To be clear, collection agencies come by the right to collect debt 2 main ways:

they are hired by the one you owe, either for a fee or percentage of recovery 9or some combo), and are essentially working for that lender..and you don't really owe the agency. Or they frequently buy the debt from the lender (at a discount...meaning if you owed say $1,000 they paid the lender say $500) and they will profit by whatever above that, minus costs, they collect...or lose what they paid. Then they own the debt and you owe them. Actually, it makes no difference to you...they have all the right to collect what the loan agreement allows.

Who you owe it to makes little difference in BK, it is the type of debt that does. And then some things like if it is secured (like home or auto loans). Bankruptcy can discharge many types of debts (see the exclusions under different questions - basically, child support, government loans, and some others are the main exclusions). However, understand BK does not involve only certain debts, or even just debts...it involves everything you owe and everything you own. Every asset (again with some limited exclusions) are used to pay the debts (liabilities) you have. You do not pick and chose what is involved and what isn't.

Finally, BK will not remove that you had the debt and failed to pay as agreed from your credit report. the BK itself is reported and that the debt was discharged and isn't owing now because of it.