Bankruptcy can serve a vital function for those who have seen their debt burden rise at an alarming rate and are now in danger of losing a place to live, a car to get around with and more. Debt collection attempts alone can make your life miserable. With a chapter 7 bankruptcy filing, you can expect to see an immediate ceasing of all collection agencies, with few exceptions. Moreover, you will no longer be obligated for the vast majority of the debt that is plaguing you. Whether or not to file for bankruptcy is a major decision; one that will continue to affect you for years. Knowing what type of debt won't be forgiven with a chapter 7 filing could affect your decision, so read on to learn more about the 6 types of debt that cannot be included in your bankruptcy filing.
- Taxes. If you owe the IRS you must pay them, regardless of a bankruptcy filing:
- Any taxes owed on the past 3 years of returns.
- Payroll taxes
- Taxes owed for a fraudulent return, no matter how old the return.
- Any penalties due to fraud.
- Liens placed on property (if placed prior to the bankruptcy filing)
- Student loans. These loans can be included in your bankruptcy filing only if you can show that having to pay the loan off would cause you to suffer an undue burden. Both of the following must be met to prove financial hardship:
- You would not be able to maintain your standard of living.
- You have other financial hardships that will last for the length of the loan's repayment period.
- Child Support. If you owe back child support payments, you must make arrangements to get caught up or face the harsh penalties. If your wages have been garnished due to back child support, that will continue.
- Lawsuit. If you ended up on the losing side a lawsuit and incurred a debt as a result of the ruling, you must still pay that debt. Additionally, all court costs and fees associated with any legal actions must be paid.
- Overlooked Debt. A complete and thorough listing of all debt on your bankruptcy paperwork is vital. Any creditor or debt that is left off that petition at the time it's finalized will remain your responsibility.
- Federal Debts. The government expects that all debt, in addition to taxes, is paid. This means any penalties, fines, and restitution debt.
Work closely with your bankruptcy attorney when it comes time to list your debts on your petition. While the above debts are not very likely to be discharged, your attorney will need full knowledge of all your financial obligations, even those you think may not be allowed, to help you determine which to list, and which ones must be paid. Visit Lawyer Referral Service of Central Texas if you're looking for a licensed attorney.