Bankruptcy wipes out all your debt. Right? Wrong! You might be surprised to find out that some debt will follow you even after your bankruptcy has been discharged. If you're planning on filing for bankruptcy protection, you need to make sure that the debt you have is dischargeable. Take a look at some of the debts that are non-dischargeable through bankruptcy.
Child or Spousal Support
If you're behind on your child or spousal support, don't think that bankruptcy will remove that debt. It won't. Under bankruptcy laws, court-imposed family support –such as child or spousal – cannot be discharged through bankruptcy. That debt will continue to accrue even after your bankruptcy has been discharged.
Some Taxes
There are some taxes that you will not be able to have discharged with your bankruptcy. Those taxes include property taxes and payroll taxes. It's important to note that you will be able to include your federal taxes if certain requirements are met. Those requirements include:
- Taxes owed are from income
- There was no tax fraud
- A return was filed
Debts Included in Previous Bankruptcy Filings
If you've had a prior bankruptcy case dismissed due to some error or action on your part, you will not be able to include your old debts on your new filing. This is particularly true if the courts found that you committed fraud or misrepresentation on the prior filing. If the courts dismissed a prior bankruptcy case, and you believe it was in error, you'll need to discuss your options with a bankruptcy attorney as soon as possible.
Student Loans
If you've taken student loans out for your education, you probably won't be able to discharge those loans. In most cases, student loans cannot be included in bankruptcy proceedings. There is an exception to this but you'll need an attorney to help you through the process. The Undue Hardship Exception will allow you to discharge student loans through bankruptcy. Here are the three things that bankruptcy courts look at when deciding on your student loans:
- Poverty – you can't afford to pay living expenses and student loan payments
- Persistence of hardship – the poverty is expected to continue indefinitely
- Good faith – you've tried to repay your debt
If you've tried everything you can to get out of debt, filing for bankruptcy may be your only solution. The information provided above will help you understand the debts that you will still have after your bankruptcy has been discharged. For more information, talk to a lawyer like Wade Bettis, J.D., Ph.D., PC.
