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Certain debts remain even after bankruptcy filing

On Behalf of | Sep 18, 2020 | Bankruptcy

After months of wrestling with this decision and weighing the benefits and drawbacks, you finally make it. Bankruptcy. For years, you have struggled with paying bills, relying too much on credit cards and, sometimes, making frivolous purchases. Then, when you have life-threatening surgery, the medical bills add on to this large pile of debt.

Filing for bankruptcy is a logical option in your situation. However, as much as you have researched this topic, you still have many, many questions. You understand that after bankruptcy you will have a nearly clean financial slate. But some debts survive. People like yourself who file for bankruptcy must understand that certain debts are non-dischargeable in personal bankruptcy.

Non-dischargeable debt remains

In a brief summary of the most common types of personal bankruptcy: Chapter 7 involves selling most of your property to pay off debt, and Chapter 13 focuses on reorganizing finances and making steady payments to a trustee who pays your creditors.

But not all debts disappear in personal bankruptcy, and you must understand that. Among the non-dischargeable debts include:

  • Alimony: In rare situations, spousal support payments can be modified.
  • Child support: These payments continue. Your former spouse and child depend upon them.
  • Most taxes: If you are quite behind and unable to pay your taxes, the IRS, in some cases, temporarily suspends your tax debt. However, once the bankruptcy is completed, the government pursues tax collection.
  • Student loans: In the past, this has held true. But in some cases, judges have discharged student loan debt as long as it meets “undue hardship” standards.

Bankruptcy helps people who feel paralyzed by debt. Eventually, you will get back on your feet financially. However