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Know the Facts: 4 Common Debts That Won't Go Away in Bankruptcy


Sometimes we find ourselves in over our heads. Especially when it comes to financial situations.

The option of filing for bankruptcy tempts many people who find themselves drowning in debt. When granting a bankruptcy dismissal, it lifts your liability for the money owed and erases most types of debts.

Filing can rack up legal fees and hurt your credit for years. So people should not use do so lightly. It should serve as a last resort.

Many people file expecting a clean slate. However, in bankruptcy, not all debt disappears.

4 Debts That Won’t Go Away in Bankruptcy

Filing for bankruptcy is a big decision. If you want to file for bankruptcy, you should first know all of the facts. Read on to learn 4 common debts that bankruptcy will not simply wipe away.

1. Family Dues

The debts not discharged by bankruptcy includes all domestic support obligations. This encompasses both alimony and child support.

The person in bankruptcy must notify the ex-spouse and/or parent that they owe child support to, and their state’s Child Support Enforcement Agency if applicable, of the intent to file.

The government views child support and alimony as priority debts. Payment of these debts takes precedence over any other type of money owed according to the Bankruptcy Abuse Prevention and Consumer Protection Act, an amendment made in 2005.

2. Tax Money Owed for Payroll, Fraud, or Liens

If you hope to rid yourself of tax debt, then look closely at what you owe exactly. Certain tax debt will not go away.

As an employer, you cannot wipe away the tax money you owe as a result of holding your employees’ wages or salary. Bankruptcy also will not save you from charges you incurred or any debts owed if you were ever convicted of tax fraud.

A favorable ruling also will not wipe out any Federal Tax Lien. The hold on your property and blemish on your credit will remain until you pay off the IRS in full.

3. Criminal Charges

You cannot cry hardship when it comes to owing money for criminal activity. Fines, penalties, and restitution will remain.

Even parking tickets do not qualify as a dischargeable debt in a Chapter 7 bankruptcy case. However, if you file for a Chapter 13 debt consolidation, they will treat municipal fines like the rest of your unsecured debts and include them in the consolidated sum.

4. Some Student Loan Debt

Most of the time, you need to bite the bullet and find a way to pay off your student loans. However, if you can prove to the court that paying off the loans will cause undue hardship in your life, and can show that you did make a good faith effort to pay what you could, then you might receive a dismissal of those loans.

What Can Be Included in Bankruptcy?

Before you allow defeat to set in from reading all the debt you can only resolve through payment, let’s look at the debt bankruptcy will discharge you from. Debts included in bankruptcy include:

  • credit card debt
  • lawsuit judgments
  • car accident debt (except in a DWI case)
  • court fees
  • medical bills
  • court fees
  • personal, housing, and retirement loans
  • personal income tax debt
  • any other on-dischargeable debt

Though some debts will not go away, bankruptcy will eliminate many common ones that can overwhelm a person.

Make an Informed Decision

Do not file for bankruptcy because you simply do not feel like paying off your debts. Going in bankruptcy will affect your credit for a period of time.

Sometimes though, bankruptcy offers good people a way out of impossible debt. Contact us, and one of our attorneys will help you make a fully informed decision.

“We Are A Debt Relief Agency, We Help People File For Bankruptcy Relief Under The Bankruptcy Code.”


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