While many debts can be discharged (eliminated) with a chapter 7 bankruptcy filing, there are a few categories of debt that will remain after your filing. The total amount of financial relief available through the bankruptcy filing should play a major role in your decision to file, so read on to gain a more accurate assessment of what debts may not be included in a bankruptcy filing.
Income Taxes
The IRS still requires that any income taxes and associated late fees and interest be paid on the following:
- Income tax for the past 3 years
- Payroll taxes
- Liens on property (liens placed prior to filing only)
Student Loans
The bankruptcy courts do give some leeway when it comes to student loan debt, but for the most part the debt is not dischargeable, whether the debt was backed by the government or a attained through a private lender. You must be able to prove that paying the student loan debt would constitute a severe financial hardship for you for the debt to be forgiven. To qualify for this provision, you must meet all 3 requirements:
1. You have a satisfactory record of loan repayment up to this point.
2. Continuing to pay the loan would cause you to be unable to maintain your current standard of living.
3. The amount of non-dischargeable debt remaining after your bankruptcy is final will cause a large financial burden that is expected to continue throughout the loan's repayment period.
Child Support and Spousal Support Obligations
Not only do you still owe any current and past payments for child and spousal support, but any wage garnishments and liens placed will be unaffected by your bankruptcy filing. If you can prove that continuing to pay spousal support (alimony) will cause an undue financial hardship for you, you may be able to discharge that responsibility, but keep in mind that the judge will also take into consideration the financial hardship being placed on the ex-spouse who will not be receiving their support as ordered by the court.
Legal Obligations
Court fees, attorney's fees, court-ordered fines and money owed as a result of losing a lawsuit must still be paid.
Debts Left Off the Petition
Care must be taken to include all debts on your bankruptcy petition; any debts not listed will not be discharged and you must continue paying the debt. You may need to view a copy of your credit report to get a complete listing of debts.
Contact a bankruptcy attorney for more information about what can, and cannot, be included in your bankruptcy filing.
To learn more about bankruptcy law, contact an attorney like Anthony Inserra Attorney at Law.
