Bankruptcy offers a clean slate for those who have been met with financial difficulty and can no longer afford to pay their bills. It helps individuals and families move forward when their finances become unmanageable. However, there is a myth regarding bankruptcy that all debts are wiped clean when you file, but unfortunately, that is not true. There are a few debts that cannot be forgiven, known as nondischargeable debts. Below we have listed the most common nondischargeable debts. If you have any questions about your bankruptcy case, feel free to contact us today!
Child Support and Alimony
While many divorce debts can be forgiven in bankruptcy, debts known as “domestic support obligations” are not. In layman’s terms, you’re stuck paying alimony and child support.
Taxes From the Past 3 Years
Any taxes from the past 3 years are non-dischargeable, nor is any tax debt incurred through fraud or tax evasion. However, taxes older than 3 years that were filed properly are normally discharged.
Student Loans
Most of the time, student loans are nondischargeable. However, if you can prove that these debts will put “undue hardship” on you and your family, they might be forgiven. Essentially you have to be unable to work now or in the future, and it will be impossible to pay off these debts. There is an additional fee if you would like to apply for “undue hardship,” and courts rarely grant it.
Government Fees
Any fee or fine that the government gives as a punishment is non-dischargeable, as well as court fees. However, if you owe money due to a service or compensation (such as the use of a public area), that can be forgiven.
Non-Discharged Debts From a Previous Bankruptcy
Debt non-dischargeable from a previous bankruptcy will not be discharged in a current case. This setup discourages multiple bankruptcy filings.
Driving Under the Influence
Personal injury and fees given as a result of driving under the influence are rarely forgiven in bankruptcy court. This not only includes cars but boats and planes as well.
Secured Debts
Secured debts are those tied to an asset, such as a car. These will not be liquidated during a bankruptcy case — instead, the lender will repossess the item or the debtor will have to pay off the item.
Forgotten Debts
If for any reason you forget to list a debt or two on your bankruptcy forms, the court cannot discharge it simply because they do not know about it. You may also be guilty of perjury for not telling the whole truth about your financial situation. When filing for bankruptcy it is necessary that you check and recheck your mailing matrix to make sure that you didn’t forget any debts.
Find the Right Bankruptcy Attorney for You in Utah
Choosing the ideal bankruptcy attorney is a crucial step in navigating the complexities of your financial situation. Our team of experienced bankruptcy attorneys in Utah is here to guide you through every step of your case. From filing for Chapter 7 or Chapter 13 bankruptcy to understanding the specifics of nondischargeable debts, we are committed to providing personalized advice and support. Schedule a free consultation with us today to learn how we can help you achieve financial freedom while minimizing the impact of bankruptcy on your life.