By Bankruptcy Lawyer in Post St Lucie Jon L Martin, the author of “What Everyone ought to Know about Debt Relief Today!”
Filing for Chapter 7 Bankruptcy can be a great way to start again with a clean slate. Such procedures will help relieve the burden of debt for those who have gotten in over their heads. However, there are certain kinds of debts that cannot be discharged through bankruptcy. These debts generally (though exceptions do exist) follow you to the grave. When considering a bankruptcy filing, it is important to keep in mind the debts listed in this article cannot be discharged and you will still be responsible for paying them off.
In general, taxes cannot be discharged through a Chapter 7 filing. This primarily refers to income taxes less than three years old and all trust-fund taxes. Income taxes that are three years old may be discharged under certain conditions. First you must have filed an income tax return for the year you want discharged and an offer in compromise is not pending or has not been pending within eight months of the filing of bankruptcy.
Do note that any back taxes owed as a result of fraud or tax evasion schemes are never dischargeable.
Money Obtained by Fraud
Naturally, any funds obtained through fraudulent means that have to be paid back are non-dischargeable. This pertains to how the money was originally obtained and does not necessarily apply to wealth or property concealed during the filing (though such concealment can create other negative consequences).
Most important about this classification to most readers pertains to use of credit cards or a cash advance on the eve of bankruptcy. If you run up a massive credit card debt on luxury goods just before filing, this debt is presumed to be fraudulent. The exception is if the cash advance or credit card debt was incurred by an emergency situation (for instance: staving off imminent foreclosure). In general, it is best to avoid making use of credit cards or cash advances for at least 90 days before filing if at all possible. If you are uncertain about how a cash advance or credit card charge may look to the courts, talking to a qualified bankruptcy attorney for advice would be your best course of action.
Alimony and Child Support
If you owe alimony or child support as a result of a divorce or other court settlement, this debt is non-dischargeable. There are certain debts related to divorce that may be dischargeable under federal law (property settlement for instance). If you are looking to discharge debts incurred through divorce, an attorney can guide you through which debts are dischargeable and which are not.
Part of the bankruptcy process is making sure creditors are made aware of the bankruptcy proceedings so they may file objections if desired. Debts to creditors who are not listed during the bankruptcy filing proceedings nor are aware of your plans to file will not be discharged. This is why being accurate and listing all of your creditors is important.
The most common non-dischargeable debt these days would be student loan debt. This form of debt will follow you until paid unless discharged by special statute. While there are a few exceptions where student loans may be discharged if they create undue hardship, courts have been notoriously stingy with the undue hardship definition. As such, unless you find yourself homeless and destitute, you will be unlikely to receive a student loan discharge.
Whether or not a debt is dischargeable will have a major impact on your bankruptcy proceedings and just how much of the debt is wiped away. This list is by no means exhaustive, but contains some of the more common forms of non-dischargeable debt we come across. If you’re planning to file for bankruptcy, talk to a qualified bankruptcy attorney who will help you determine which debt can be discharged and which cannot.