If you are thinking about filing for chapter 7 bankruptcy in an effort to wipe your debt slate clean, you should know ahead of time that certain types of debt cannot be forgiven with a filing. You can expect most unsecured debt, such as credit cards and personal loans, to be discharged with a chapter 7 filing. Many people hold high credit card balances with large minimum payment requirements each month, and filing for bankruptcy can provide a great deal of debt relief when it comes to those particular oblications. To learn more about 3 types of debt that you may still be responsible for paying after your bankruptcy petition is final, read on.
The federal government has put in place measures to ensure that your debt to the IRS continues to be owed, regardless of any type of bankruptcy filling. The following tax obligations cannot be discharged:
- All taxes owed, including penalty fees and interest, for the last 3 years of returns.
- All taxes, including penalties and interest, on any fraudulent returns.
- For the self-employed, any payroll-related taxes, such as unemployment and social security taxes.
- Any liens on property as a result of a tax debt that was placed before the bankruptcy was filed.
2. Student Loans
Normally, student loan debt cannot be included in your chapter 7 bankruptcy filing except under rare circumstances. You must show proof that paying your student loan obligation would cause a severe financial burden to you. To discharge a federal or privately-held student loan, you must meet all 3 of the following conditions:
- You must show a past history of on time and up-to-date payments which prove that you have, up to this point, made a good faith effort to pay your obligation.
- You must show that the loan obligation would cause such a financial hardship that you would be unable to maintain a certain standard of living.
- You must be able to show that this hardship would continue for the duration of the student loan repayment period.
3. Child Support
If you are behind in your child support obligation, you cannot include that debt in your bankruptcy. Additionally, if lien or wage garnishments have been placed on your property and salary as a result of owing back child support, those provisions will not be lifted until you satisfy the debt owed. While financial obligations to minor children fall into the non-dischargable category for bankruptcy, spousal support (alimony) may be suspended if you can prove that continuing to meet this obligation would place an undue hardship on you. Keep in mind that the bankruptcy court will take into consideration the undue financial burden that could be placed on your ex-spouse by you not paying this obligation.
It should be noted that there are many more types of debt that cannot be forgiven with a chapter 7 bankruptcy filing. A confidential and informative consultation with a bankruptcy attorney is recommended, particularly when it comes to complicated tax issues and obligations, so get started on your fresh financial start by scheduling a meeting today.Share