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Filing Bankruptcy - Understanding Non-Dischargeable Debts

Filing Bankruptcy - Understanding Non-Dischargeable Debts
"""Many individuals have the misconception that registering for bankruptcy will eliminate all of their debts. They would not be required to pay the amounts owed to their respective creditors. However, this is not the case. There are certain types of loans that have been determined to be non-dischargeable. Filing under chapter 7 will eliminate all types of debt, but you will still be responsible for the debts that are not dischargeable. Depending on the specifics of your case and the court's ruling, such debts can vary widely. Here are a few of the most prevalent.

Student Loans

Regardless of the reason for your bankruptcy petition, educational debts such as student loans are not dischargeable. These may consist of loans for room and board, textbooks, tuition, etc. Even if the court grants your petition and orders the sale of all of your assets, you will still be responsible for repaying these loans. However, there is a rare exception: if you can demonstrate to the bankruptcy court that the loans will cause you undue hardship, they may also be discharged. For instance, you may be required to demonstrate that a permanent disability prevents you from working and living a normal financial existence. If you can demonstrate these elements, the court may order the discharge of your student loans.

Obligations Due To The Court

If you owe court fees, these debts are also not dischargeable during a Chapter 7 bankruptcy filing. Similarly, if you owe a certain amount to the victim or the court as a result of any criminal activity, such debts are not dischargeable. Any type of court-ordered restitution cannot be cancelled. In every circumstance, such debts are deemed non-dischargeable.

Debts Related To A Divorce Or Marriage Dispute

Such debts cannot be discharged under chapter 7 of the bankruptcy code if they are associated with a court-ordered divorce or dissolution of marriage. Some people mistakenly believe that these amounts can be discharged if the ex-spouse has no objections, which is not the case. Even if the ex-spouse does not object, these amounts are non-dischargeable debts during a direct liquidation bankruptcy filing. Therefore, as you prepare to file your petition, you must bear in mind that you cannot discharge the debts associated with a divorce or a marriage.

Specific Types Of Taxes

According to the new bankruptcy laws, all taxes are non-dischargeable with the exception of those listed below. Even if you file for bankruptcy, you will still be responsible for paying these taxes.

Gross-receipts-based taxes or income taxes

If the taxes are accurate and there are no omissions or errors in the return, the IRS will issue a refund.

If the tax liability is older than three tax years,

Furthermore, if you owe amounts associated with alimony and child support, these debts cannot be discharged while you are petitioning for bankruptcy.

" - https://www.affordablecebu.com/
 

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"Filing Bankruptcy - Understanding Non-Dischargeable Debts" was written by Mary under the Finance / Wealth category. It has been read 99 times and generated 0 comments. The article was created on and updated on 02 June 2023.
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