Debt Relief With Bankruptcy: Know The Limits
Posted on: 8 March 2023
While a chapter 7 filing will eliminate a lot of debts, some debts can be trickier to deal with. Being aware of the limits is important as you plan to seek debt relief. In most cases, the discharge of major burdens like credit card and medical debt will be enough for filers to see their way clear to a debt-free future. Read on and find out what to know about certain debts that might not be discharged with chapter 7.
Tax Troubles
Unpaid back taxes can be a confusing form of debt. Not all taxes are automatically available for discharge. Income taxes owed on returns that are several years old may be discharged if they meet the rules. Only income taxes are referred to here and they must not be associated with a fraud case to be discharged. When it comes to more recent tax debts, you must continue to pay those as agreed. If you don't have an installment agreement, the IRS may work with you to set something up.
Child Support Obligations
If you are behind on your child support obligation, maybe filing for chapter 7 and ridding yourself of other types of debt could allow you to get caught up. Child support is one of those debts that cannot be discharged under any circumstances. Contact the child support enforcement agency and set up a plan to get things caught up. If you can show the family court judge that your income is substantially less than it was when the order was first signed, an adjustment in the amount owed each month could be altered.
Legal Obligations
For those who have lost a civil lawsuit and have a judgment against them, the amount owed will remain a debt. However, judgments connected to a debt that was included in the bankruptcy should go away. Speak to your bankruptcy attorney about creditor-based judgments. Additionally, legal fees associated with other court matters may not be discharged. Lawyer fees, court fees, and victim restitution obligations cannot be discharged.
Student Loan Debt
Generally, student loan debt cannot be discharged with chapter 7. However, hardship cases may be heard by the bankruptcy trustee and dealt with on a case-by-case basis. The debt holder must show that paying the student loan debt would create a hardship that won't be overcome until the debt is paid even with bankruptcy.
To find out more about debts that may still be there after the bankruptcy is over, speak to your bankruptcy lawyer.
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