What Bankruptcy Can’t Do

Many people believe that filing for bankruptcy is a cure-all for their financial woes, but in reality, there are certain types of debts that cannot be discharged through the bankruptcy process. In this blog post, we will discuss what bankruptcy can’t do.

Child Support and Alimony

Filing for bankruptcy will not eliminate child support and alimony obligations. These debts will remain exactly as they were before you filed for bankruptcy. In fact, if you file for Chapter 13 Bankruptcy your repayment plan will have to include these debts, and they will need to be repaid in full.

Secured Debts

While declaring bankruptcy will eliminate your debts, it will not eliminate any liens. A lien is when a creditor has the right to repossess your property if you do not pay off the debt. Even after filing for bankruptcy, a creditor can repossess your property if a lien has been established.

Student Loans

The only permissible way that student loans can be discharged with bankruptcy is if the debtor shows that repaying the student loan will cause “undue hardship.” Proving this is typically not an easy task. Not only do you have to show that you cannot afford to repay the loan, but you also have to prove that it is very unlikely that you will be able to pay it off in the future.

Tax Debts

There are many requirements that need to be met in order to eliminate tax debt through bankruptcy. In some cases, older debts from unpaid income taxes can be discharged, but for the most part tax debts will not be covered in your bankruptcy.

Non-Dischargeable Debts

The following debts are not dischargeable under either Chapter 7 or Chapter 13 bankruptcy:

• Debts owed for personal injury or death that you caused by driving intoxicated.
• Fines and penalties imposed for violating the law
• Any debts that you forget to list in your bankruptcy papers, unless the creditor learns of your bankruptcy case
• Traffic tickets
• Criminal restitution

Considering Filing Bankruptcy?

If you are considering filing for bankruptcy, we can help. At McFarlin LLP, we have ample experience handling bankruptcy cases. Our bankruptcy lawyers will discuss your bankruptcy options with you, and if bankruptcy is right for you, we will ensure that you feel comfortable with the every step of the process. We offer free consultation to prospective clients. Contact us at (888) 728 0044 or email us here to discuss your bankruptcy case.