An Overview of Bankruptcy Filing: What Debts are Not Included in the Bankruptcy Discharge?

While a negative impression is still associated with filing bankruptcy, courts handle numerous bankruptcy cases every year. Individuals considering bankruptcy are often not familiar with how to file, more so how they can benefit from the different types of bankruptcy. As such, an experienced bankruptcy attorney is essential for you to be familiar with the different bankruptcy forms and terms.

I am bankrupt and am currently planning to file for bankruptcy. What is debt forgiveness or discharge?

Some people file for bankruptcy with hopes that they would not have to pay off or even partially repay some of their debts. In declaring bankruptcy, numerous types of debt can be forgiven. Under bankruptcy laws, however, certain debts are likely not included in the bankruptcy discharge. These are:

  1. Child support, alimony, or criminal fines

Even if a debtor opted for bankruptcy, child support and domestic support obligation will not be discharged. (Spousal support could only be considered if it was meant to equalize the division of personal property after a divorce. Consult with a bankruptcy code expert if you need to learn more about this). Regardless of circumstances, you will likewise not be able to have criminal fines forgiven through your bankruptcy case.

  1. Tax debt or student loan debt, unless they meet very specific conditions

Bankruptcy DischargeBankruptcy law specifies five conditions that must be met before income taxes could be discharged. Three are related to timing, particularly on the period between the submission of tax returns and actual bankruptcy filing. The fourth is that there was no willful evasion of income tax, and the fifth is on tax liens. Your bankruptcy lawyer can explain to you the specifics of this procedure. Student loans, on the other hand, may be considered as discharged debt only if undue hardship can be established. 

  1. Debts from a creditor whose objection was brought to court (and was recognized)

If you are looking for debt relief but the bankruptcy court is convinced that you engaged in bad behavior when the debt was incurred, that particular debt might not be forgiven. If you are filing for bankruptcy but a specific lender was able to prove that you were engaged in fraudulent activities, for example, whatever is owed from the said lender might not be discharged. Here, repayment would likely be necessary.

  1. Debts that were not listed or those that were incurred after filing bankruptcy

The bankruptcy discharge will likewise not include something that you technically did not owe until after you declare bankruptcy. Regardless if they are unsecured or secured debt, if they were incurred after bankruptcy, they will not be discharged.

Creditors and specific debts that were not listed in your bankruptcy petition will likely not be included in the discharge. Bankruptcy lawyers from a reliable law firm will assist you in relevant paperwork and court forms. They will help you prepare for your bankruptcy proceedings. They will also help ensure that you list down all your debts and you enjoy bankruptcy protection and discharge whenever applicable.

Get legal help from a trusted local attorney to help with your bankruptcies. Contact us at Grafton Firm, LLC to consult with experienced bankruptcy attorneys.