What Debt Cannot Be Discharged?

What Debt Cannot Be Discharged?

Bankruptcy can helpWhat Debt Cannot Be Discharged? you discharge many debts and provide you with an opportunity to start fresh after a real organization or liquidation of your assets. Once debts are discharged a creditor can no longer take action against the debtor and as a result, there’s no chance that they could collect or seize any collateral from your loans. Not all debts can be discharged in bankruptcy however and there are some types of debt that can be extremely difficult for you to discharge. If you’re looking at bankruptcy as a potential fresh start, it’s important to know more about the types of debt that bankruptcy can assist you with. This article will go over what debt cannot be discharged and the difficult debt to discharge when filing for bankruptcy.

 

The Differences Between Chapter 7 And Chapter 13

In a chapter 7 bankruptcy case the trustee will be appointed by a bankruptcy court that sells off many of your assets and then uses the proceeds from the sale to pay back your creditors a portion of what you owe. Specific assets are exempt from the liquidation and this means that you could keep part of the equity in your home, the car that you use to get back and forth to work, clothing and tools that you need for your work, retirement benefits, and Social Security benefits. 

Non-exempt assets for Chapter 7 bankruptcy cases can include items like your property, secondary vehicles, recreational vehicles, valuables, antiques, investment accounts, or your private investments. Most of these items will be sold within four months after your filing date and the process will be overseen by a series of federal bankruptcy officials. 

 

Under Chapter 13 You Will Commit To A Repayment Plan For A Portion Of Your Debts Over 

3 to 5 years. As long as you are meeting the terms of the agreement you can hold onto your non-exempt assets. At the end of the chapter 13 bankruptcy period of 3 to 5 years, your debts will be discharged. 

Chapter 7 bankruptcy is usually designed for people without the financial resources to pay back their debt under Chapter 13. If a person would be unable to manage a repayment plan Chapter 7 bankruptcy is often recommended. 

 

The Types Of Debts Which Cannot Be Discharged In A Bankruptcy:

 

Debts For Personal Injury Caused By The Debtors Operation Of A Motor Vehicle

If you’ve been involved in a case where you’ve injured someone or potentially cause wrongful death as a result of your involvement in a vehicle accident where you are intoxicated or under the influence of various substances, you will continue to be responsible for the damages that you need to pay out for the compensation. 

Debts That You Failed To List On Your Bankruptcy Application

You need to be able to disclose all of your assets, income, and debts on your bankruptcy application. Debts that you failed the list on your bankruptcy filing will not be forgiven and if you are attempting to sway the case towards your application getting approved, debts that you failed to list in your bankruptcy filing will never be excused if you are unable to offer evidence to support them. 

Child Support And Alimony

If you’re paying child support and alimony or you have a series of payments that have backed up, you will be responsible for repaying these debts even after bankruptcy. Bankruptcy mostly handles consumer debts and medical debts but items that your family may be owed as a result of an earlier divorce proceeding or child support that has been unpaid, you will be responsible for. 

Tax Liens And Unpaid Taxes

Tax liens and unpaid taxes will not be forgiven under bankruptcy law. Under some federal, state, and local taxes there could be a chance that you will be able to discharge the debts if the taxes you owe date back several years. If you’re still carrying a tax bill from the past few years, this is not a debt that you can discharge under regular bankruptcy. 

Debts Incurred From Malicious Injury To Person Or Property

If you’re involved in a case where willful and malicious harm was done to a person or property, you’ll be responsible for paying out the injury to people including compensation for their medical bills as well as property damage. These are the types of debts that are inexcusable under any type of bankruptcy law. 

What Debt Cannot Be Discharged?

 Difficult Debt To Discharge In Bankruptcy:

Income Tax Debt

The income tax cannot be destroyed without a type of special exemption which involves petitioning the bankruptcy court and explaining why you deserve relief. If you then can tax debts that you cannot possibly repay, it’s usually best to have a tax attorney on your side before filing for bankruptcy. 

The IRS And Federal Taxes

The IRS can offer alternatives for people who are unable to pay their federal taxes. An offer of compromise from the IRS could have you agree to a lesser amount in your federal taxes and a payment period for the amount.

Student Loan Debt

Unless you can demonstrate undue hardship as a result of you living with student loan debt. It’s often difficult to discharge during bankruptcy. Most student loan debt can be renegotiated in a repayment plan but it is not usually possible to discharge a student loan debt.

If you are interested in working with a bankruptcy attorney, contact our staff today to learn more.