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Not All Debts Are Created Equal In Bankruptcy

Not All Debts Are Created Equal In Bankruptcy
"""A bankruptcy discharge refers to the conclusion of a bankruptcy proceeding in which the debtor is released from their debts and discharged from liability for those debts. Non-dischargeable debts cannot be eliminated through bankruptcy, and the debtor is responsible for paying them. There are numerous types of debts that cannot be discharged in bankruptcy, and the manner in which the debtor repays these debts varies depending on the form of bankruptcy filing. In Chapter 7 bankruptcy, the debtor is responsible for repaying creditors after receiving a discharge for debts that do not qualify under the bankruptcy. In their Chapter 13 repayment plan, debtors who file for Chapter 13 bankruptcy can repay non-dischargeable debts. Non-payment of non-dischargeable debts may result in creditors seizing and liquidating your assets as part of their collection efforts.

Non-dischargeable debts include:

Child/spousal support payments - Bankruptcy law prohibits the discharge of child support or alimony payments upon filing for bankruptcy. These payments are considered """"domestic support obligations"""" and cannot be discharged in bankruptcy. Before, on, or after a bankruptcy filing, owed payments are legally recoverable by the creditor. Regardless of a bankruptcy filing, the spouse, former spouse, or child has the legal right to pursue collection of support payments. In addition, divorce-related debts cannot be discharged through bankruptcy.

Federal, state, and local taxes cannot be discharged through bankruptcy unless (a) the taxes are older than three years, (b) tax returns for the previous years were filed on time, and © the tax returns were accurate when filed. Any credit card debt incurred by paying taxes with a credit card is not dischargeable in bankruptcy.

Student loans - Government-backed or privately funded, student loan debt is not dischargeable in bankruptcy. The bankruptcy court may grant a discharge if (a) the payments would impose an undue financial hardship on the debtor and (b) the debtor can demonstrate the undue financial hardship caused by paying the debts.

Penalties resulting from criminal or negligent behavior - Penalties incurred as a result of criminal, fraudulent, or negligent behavior cannot be discharged in bankruptcy. Criminal actions, such as traffic ticket penalties and restitution payments, are not dischargeable. The debtor will be held liable for fraudulent actions such as providing incorrect information or withholding information on a bankruptcy petition. Debtors are also held accountable for debts incurred as a result of negligence that resulted in the injury of another party.

Recent Credit Purchases and Cash Advances - Bankruptcy laws prohibit the discharge of any recent credit purchases or cash advances. A credit purchase or cash advance debt is non-dischargeable if (a) it exceeds $1,150 and (b) it was incurred within 60 days of the bankruptcy petition.

The majority of credit card debt, medical debt, judgments, business debts, mortgage debt, and auto debt are considered dischargeable. Despite the fact that mortgage and auto loan debts are dischargeable, the lender will repossess the property.""

" - https://www.affordablecebu.com/
 

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"Not All Debts Are Created Equal In Bankruptcy" was written by Mary under the Finance / Wealth category. It has been read 171 times and generated 0 comments. The article was created on and updated on 01 June 2023.
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