Bankruptcy is a tool that should be used by people who have experienced a financial crisis and need help to recover and start fresh. A bankruptcy can do several things to help you if you're overextended and drowning in debt but there are certain things that a bankruptcy cannot do. The problem is that there are a lot of misconceptions about bankruptcy and hopefully this will help clear some of that up.
Debts Bankruptcy Doesn't Erase
- Bankruptcy does not erase your debt for secured loans such as vehicles and real estate.
- A bankruptcy does not remove your responsibility to any ex spouse or children, you'll still be required to pay court ordered support.
- Although if there has been a considerable drop in your income you can ask the family court for a reduction in support, but this has nothing to do with your bankruptcy.
- If you have student loans you will still have to pay them after you've filed a bankruptcy, these loans are considered exempt and will not be discharged.
- If you've accumulated criminal fines or have been ordered to pay restitution you'll still have to make good on those debts.
- A bankruptcy does not discharge any debts you rack up after you file for bankruptcy and quite frequently the charges incurred six months prior to filing will also not be erased.
The rule of thumb is that you have to pay your taxes, both state and federal, but there are some rare cases when parts of your tax debt or penalties for late taxes do not have to be paid. You'll need a bankruptcy attorney to help you wade through your tax responsibilities.
If you still have questions about what debts will be discharged with a bankruptcy, contact an attorney at Allmand Law to discuss your case specifics.