Many debts you incur cannot be discharged in bankruptcy, including alimony, child support, and certain tax debts. Other non-dischargeable debts you cannot file bankruptcies for include debt incurred intentionally or maliciously and debt you did not include in the required list of debts and creditors.
When you work with a bankruptcy lawyer, rather than handling your case and filing your bankruptcy petition on your own, they can explain which debts can be discharged under the bankruptcy laws that apply to your case, even with difficulty. These include student loan debt, which can be discharged if you meet certain guidelines. A bankruptcy lawyer can explain the circumstances that can help you relieve difficult-to-discharge debts.
Understand the Limitations of Filing Different Types of Bankruptcies
An effective bankruptcy filing aims to eliminate as much debt as possible and give you the chance to start over with a clean financial slate. To understand the types of debt you cannot discharge in bankruptcy, you must first understand which debts you can.
Qualifying debt typically includes:
- Credit card debt
- Medical debt
- Personal loans
- Utility bills
- Back rent or fees from a prior lease
Discharged debt is permanently erased, so having as much debt included in the process as you can is important. Unfortunately, some types of debt cannot be included.
Debts that Cannot Be Discharged When You File for Chapter 7 Bankruptcy
Chapter 7 bankruptcy is frequently chosen, in part, because it allows you to discharge most of your debt load while also allowing you to keep most of your property and belongings. Debts that cannot be discharged under Chapter 7 bankruptcy include:
- Certain federal and state tax liabilities
- Court-ordered spousal or child support payments
- Debts you must pay in a drunk driving accident or other criminal restitution
- Debts not included, even inadvertently, when you file
- Certain fines and penalties assessed by a government entity
A bankruptcy attorney will work with you to help you discharge as much debt as is allowable. They can also help you avoid overlooking debt that does qualify for discharge.
Debts that Cannot Be Discharged When You File for Chapter 13 Bankruptcy
Chapter 13 bankruptcy is typically filed by businesses and individuals whose income is too high to qualify for Chapter 7. Chapter 13 allows you to discharge many of the same debts as Chapter 7.
Debts that do not qualify and cannot be eliminated for Chapter 13 filers include:
- Mortgage payments (in some cases)
- Alimony and child support obligations
- Certain state and federal tax obligations
- Debts that stem from drunk driving cases
- Certain debts created by a government overpayment
- Criminal fines and court-ordered restitution
Your lawyer will review your financial situation and explain the rights of creditors to demand repayment of certain debts.
Debts that Cannot Be Discharged When You File for Chapter 11 Bankruptcy
Small businesses and large and small corporations can file for Chapter 11 bankruptcy. It allows filers to reorganize debt into a realistic repayment plan. Chapter 11 does not allow you to discharge certain debts, including student loans, overdue and current child support, and taxes. Your lawyer can explain the obligations your business will continue to owe.
Debts that Cannot Be Discharged When You File for Chapter 12 Bankruptcy
Chapter 12 bankruptcy is specifically for family farmers and fishermen. It does not discharge or eliminate debt, but it allows filers to create a plan to repay debt over three to five years. Like other chapters, Chapter 12 bankruptcy will not let you eliminate the following:
- Child support
- Secured debt on collateral that you are keeping
- Debt accrued through fraud, embezzlement, or larceny
Exceptions that May Allow You to File Bankruptcy for Student Loan and Tax Debt
You can file bankruptcies against certain debts you might not believe would qualify for dischargement. Some debts can indeed be challenging, but not impossible, to eliminate.
Student loan debt can be discharged after the court’s careful review of your current financial situation. The bankruptcy court will require proof that:
- You are experiencing severe financial hardship.
- You made a sincere effort to pay your student loans.
- Paying your student loans will significantly worsen your financial outlook.
Similarly, Internal Revenue Service bankruptcy guidelines allow you to discharge certain past due income taxes. You must complete and file tax returns for the preceding four-year period and file upcoming taxes on time. Your lawyer will explain your responsibilities and the steps you can take to meet them.
How a Bankruptcy Attorney Can Help You Identify Allowable Exceptions
When hard-to-discharge debt complicates your bankruptcy case, an attorney can help you establish and document undue financial hardship. They can also:
- Identify the best bankruptcy chapter for you to file under
- Document your inability to meet your minimal living expenses
- Complete and submit hard-to-understand forms and schedules
- Explain the automatic stay and what to do if creditors do not abide by it
Crushing debt can be hard to cope with and makes daily life challenging. When you are feeling overwhelmed by debt and looking for relief, it can be hard to know exactly where to turn and what to do. A bankruptcy lawyer can guide you through the process right from the start.
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Find Out What You Cannot Discharge When You File for Various Bankruptcies
If you are drowning in debt that is making it hard to meet your daily needs, our bankruptcy lawyer will help you get much-needed debt relief. We will also explain what you cannot file bankruptcy for if you decide filing for bankruptcy is the right decision for you.
Learn more about demonstrating severe financial hardship and discharging as much debt as possible by contacting our case evaluation team at Farmer & Morris Law, PLLC, today.