While a chapter 7 bankruptcy is well-known for wiping out a great deal of debt with a single action, there are three debts that may stubbornly appear after all is said and done. These three debts cannot be included in with the rest of your debts and knowing all about that might help you to make a more informed bankruptcy decision. Read on to learn more about these three debts.
The Tax Man Still Cometh
When you get behind on your bills you may also find it challenging to pay your taxes. Unfortunately, the IRS is not willing to allow you to just dismiss those tax debts when you file bankruptcy. There are limits on what you may still be responsible for, however. You only need worry about the most recent three years of taxes owed and the IRS has a few programs that may allow you to pay that debt over time with an installment agreement.
Another tax-related issue is liens on your property. A chapter 7 bankruptcy would normally lift those liens and allow you full access to your home or other property, but a tax lien will remain until the taxes owed are paid in full. On a brighter note, no new liens will be placed by the IRS or anyone else once you file for bankruptcy.
Education Loans Linger
If you have burdensome student loan debt then you may or may not have to pay those debts. While student loan debt is not normally allowed to be included in a chapter 7 bankruptcy, there is a special hardship provision that might allow you some leeway. To gain access to the hardship provision you must be able to demonstrate that all three of the following situations exist:
1. You have paid as agreed on the debt up to this point.
2. If you kept paying as agreed on the debt you would not be able to maintain your current standard of living.
3. The student loan debt burden once your bankruptcy is complete will cause a negative impact on your financial situation even given the debt you were able to have forgiven.
Your Child Support Obligation
The final lingering debt is back child support. You might have guessed that just because your financial situation is in dire straights is no reason to overlook your need to pay for the support of your child. This is also the only area where liens and wage garnishments will remain in place until the balance is brought up to date. You may be able to request a hearing for a reevaluation of your financial situation, however.
Speak to your bankruptcy lawyer, like Clinger Richard S, to learn more about these debts that cannot be included in your bankruptcy.