When your debt is discharged, the amount of money owed is essentially wiped away, relieving you of your obligation to pay. But when filing for Chapter 7 bankruptcy, it’s important to know that not every type of debt is discharged. Read ahead and find out which obligations Chapter 7 leaves you with, even after declaring bankruptcy.
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Student loans, in general, are very difficult to discharge. In rare instances, particularly those involving a severe hardship condition, those filing for Chapter 7 bankruptcy are exempt from paying student loan debts.
Criminal fines and debts
If you have incurred debt as a result of criminal activity or negligence, such as debts and judgments related to personal injury or the death of others, Chapter 7 will not discharge what you owe.
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Most tax debt cannot be discharged in bankruptcy; however, in some instances tax debt can be discharged. Here are some circumstances where tax debt may be absolved:
- Income tax is sometimes eligible for discharge, but never payroll tax or tax fraud penalties.
- You did not willfully evade or defraud the IRS. Using false social security numbers or other fraudulent techniques will incur tax debt that cannot be discharged.
- The debt is old. If the debt is from at least three years before you filed for bankruptcy, you may be able to discharge tax debt.
If a court has found that you obtained debt fraudulently or illegally, it cannot be discharged. As an example, if you incurred a lot of credit card debt shortly before filing bankruptcy, the court will typically refuse to discharge that debt. Or, if you lied and/or used false information on a loan application to obtain funds, the incurred debt will not be forgiven even if you file for bankruptcy.
Alimony and Child Support Payments
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Payments ordered during divorce court can potentially be renegotiated, but these debts will not be discharged following Chapter 7 bankruptcy.
For more information about discharging debts or for the services of a Las Vegas Chapter 7 bankruptcy lawyer, contact DeLuca and Associates today.