Three Debts That Are Not Covered By A Chapter 7 Bankruptcy

If you have enormous debt and believe that there is no way you will ever be able to climb out of this hole, you are likely thinking about a bankruptcy. Yes, you know it will hurt your credit for many years, but at this point you probably don't care. However, before you get the idea that a bankruptcy will give you a fresh start, you need to understand that there are certain debts not covered in a Chapter 7 filing. The following are among the most significant.

Income taxes

You may be an individual that has a large portion of their debt in the form of back taxes. The bad news for you is that most income taxes cannot be discharged. Although this is not completely true, you will likely have to settle up with the Internal Revenue Service in some manner other than a Chapter 7 filing. There are certain exceptions to this, and an attorney can assist you in exploring these possibilities.

Student loans

Although it may have seemed like a good idea at the time, many people live to regret the these loans, or at least the total amount they borrowed. If you are one of these people, a Chapter 7 bankruptcy is not going to help you. You may have heard of exceptions for economic hardships, but unless you are disabled and cannot produce any income for the rest of your life, you're likely to be stuck with this debt. Again, you should always consult with an attorney, especially regarding recent changes in the law.

Certain damage awards

Although many court judgments can be bankrupted, those that relate to personal injury, including wrongful death, are not likely to be discharged. This is especially true with regard to personal injury due to driving while intoxicated. What is covered and not covered under a Chapter 7 bankruptcy for damage awards is determined by both state and federal law. In addition, along with personal injury, any debt that a court deems to be criminal restitution will not be discharged.

The three items above represent the most noteworthy of debts that are not covered by a Chapter 7 bankruptcy, but there are others. The thing to remember is that the fresh start you think you might get with a Chapter 7 filing may not be possible. However, there may be possibilities with a Chapter 13 bankruptcy. Although this bankruptcy takes the form of a debt consolidation, some of the debts listed above are covered, and although they will not be discharged, they may be reduced. A bankruptcy attorney can help you decide which bankruptcy is best for you. For more information, contact professionals like Hoffman, Hamer & Associates, PLLC.