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Know What You Owe: Nondischargeable Debt

26 October 2016 by Kenneth Pierce

You already know that bankruptcy can present filers with an opportunity to make a fresh financial start, but did you know that not all debt can be included in your bankruptcy petition? Without a doubt, the vast majority of your debt may be discharged with a chapter 7 bankruptcy, but there are several types of debt that you will still owe after your bankruptcy, and knowing about those debts could figure heavily in your decision to file. Read on to get a better understanding of what you might still owe once your bankruptcy is complete.

The IRS seldom forgives tax debts.

While it may be possible to work out a deal with the IRS to make your tax payments on an installment plan or to even participate in a program known as Offer in Compromise, where some of your debt is forgiven, for the most part you cannot accomplish any tax debt relief measures thorough a chapter 7 bankruptcy filing. For those who owe back taxes, you must still pay or make arrangements to pay all debt accumulated in the past 3 years. Fines and penalties for taxes in arrears must also be paid, and any liens placed on your property will remain in place until the debt is paid. The IRS, cannot, however, place any new liens on your property due to back tax debt once you file for bankruptcy.

Student loan debt cannot be discharged.

No matter what type of student loan you have, either privately-funded or government-backed, you may not be able to include it in your chapter 7 filing. There is, however, a hardship exception available to those in extreme financial dire straits. To prove a hardship exception, you must meet all 3 of the following requirements:

1. Your payment record, up until your recent financial difficulties, has been good.

2. It would be impossible to maintain your current standard of living if you continue paying your student loans.

3. If you are unable to include the student loan on your bankruptcy, it would present such a hardship that the amount of debt that you are still responsible for paying after your bankruptcy would present a considerable hardship and that hardship would continue for some time.

Child support debt is never forgiven

The courts place a high priority on this obligation, so if you are behind your child support payments, you are not going to be able to include that debt in your bankruptcy. Additionally, all wage garnishments and property liens will remain in place until your support debt is brought up to date. It should be noted that those with financial hardships may be able to have the child support order amended, at least temporarily, by requesting a hearing from a family court judge.

For more information about debt that cannot be included in your bankruptcy filing, speak with a bankruptcy lawyer, such as Todaro David M Co LPA .

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