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What Debts Are Eliminated Upon Filing for Bankruptcy?

What Debts Are Eliminated Upon Filing for Bankruptcy?
"People in financial distress who are contemplating bankruptcy frequently ask, ""Which debts will be eliminated if I declare bankruptcy?"""" However, bankruptcy laws specify which types of debt cannot be discharged. In bankruptcy, almost all unsecured debts are discharged, so it is much simpler to discuss which debts will not be eliminated.

The debts listed below are never dischargeable in bankruptcy. These debts will persist after the completion of a Chapter 7 bankruptcy case. In a Chapter 13 bankruptcy, these debts must be paid in full during the payment plan, and if they aren't, the residual balance will remain after the plan has been satisfied.

1. Debts not included in your bankruptcy filing.
Child support and spousal support
3. Student obligations
4. fines and penalties assessed for law violations
Recent income tax and other tax obligations

Except for the tax debts, which require further explanation, the aforementioned dischargeable unsecured debts are relatively simple. Recent income tax and all tax arrears must be paid. In a Chapter 7 bankruptcy filing, income tax may be discharged if and only if all five of the following conditions are met:

The Internal Revenue Service has not filed a tax lien against your property. If all of the other four conditions are met, then the taxes can be discharged, but the lien will remain on the property after the bankruptcy, allowing the IRS to continue to collect the debt.

2. The debtor did not file a fraudulent tax return or attempt tax evasion.

3. The obligation relates to a tax return submitted at least two years prior to the bankruptcy filing.

The tax return was due at least three years prior to filing for bankruptcy.

5. The taxes were assessed, which means an IRS notice of assessment of federal taxes was received at least eight months prior to the bankruptcy filing.

In addition to the debts listed above that are never dischargeable in bankruptcy, there are additional debts that a Chapter 7 bankruptcy judge can declare non-dischargeable at the request of a creditor or the Trustee. In Chapter 13 bankruptcy, these debts are discharged through the payment plan.

1. Debts incurred as a result of deceit
2. Credit acquisitions of $500 or more for luxury products or services made within ninety days of filing
3. Loans or financial advances of at least $750 taken within the preceding seventy days
4. Debts resulting from the willful or malevolent injury of another person or their property
5. Debts incurred due to embezzlement, theft, or breach of trust
Debts incurred as a result of a divorce decree or settlement. This will not be discharged unless the debtor would still be unable to pay after filing for bankruptcy and the benefit to the debtor from discharge would outweigh any harm to the ex-spouse.

This discussion of the categories of unsecured debt that cannot be discharged in bankruptcy is for informational purposes only and is general in nature. The dischargeability of certain debts is a very complex aspect of bankruptcy law; if you are considering bankruptcy, you should consult with a bankruptcy attorney so that he or she can evaluate your situation and inform you of which debts you will be able to discharge and which you will be required to continue paying.""

" - https://www.affordablecebu.com/

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"What Debts Are Eliminated Upon Filing for Bankruptcy?" was written by Mary under the Finance / Wealth category. It has been read 121 times and generated 0 comments. The article was created on and updated on 03 June 2023.
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