Debts Unforgiven: Understanding Debts That Cannot Be Discharged

The way that bankruptcy allows filers to make a fresh start is well known, and this benefit can help balance out the potentially negative effects that a chapter 7 bankruptcy filing can have on your credit. While you may already know that certain types of debt will just go away, you may not realize that not all types of debt can be included in your bankruptcy. Read on for a better understanding of what kinds of debts might still linger on after your bankruptcy is done and ordered.

Taxes Never Go Away

There are some measures that taxpayers can take to help them deal with taxes that are owed to the IRS, but a chapter 7 bankruptcy is not one of them. You cannot include any tax debts on your list of creditors since these types of debt cannot be dissolved. Tax debts older than three years are allowed to be listed, however. The IRS does offer helpful installment plans that allow you to break your debts down into monthly payments, however. Additionally, you may able to come to an agreement with the IRS to reduce your tax debt with an Offer in Compromise. If you have had liens placed on your property because of the tax debt, those liens will remain in place until the debt is satisfied. No new liens may be placed once your file bankruptcy, however.

Educational Loans Usually Cannot be Discharged

For the most part, your student loan debt cannot be included in with your other debts when filing for bankruptcy. Whether your loan is government-backed or privately-backed, you can only have it forgiven if you qualify for certain stringent hardship exceptions. You must be able to prove that you are in an extreme state of financial hardship, and meet the three below requirements:

1. Up until now (or recently), you must have a good record of making your loan payments on time.

2. If you were to continue to pay your debt obligation, it would mean sacrificing your standard of living.

3. If you cannot have the student loan debt forgiven, it would place an undue hardship on you that could continue to affect you for a prolonged period of time.

Forget Including Child Support on that Bankruptcy

There are no exceptions available for those that owe back child support, you must make arrangements with the enforcement agency to bring your account up to date. If your wages have been garnished and/or you have liens on your property as a result of failure to make child support payments, those will remain in place. You may be able to have your future obligation amount reduced by requesting a court hearing, however.

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