The choice to declare bankruptcy should not be made lightly. It is a huge decision which can have consequences that stick with you for years to come. However, in dire circumstances, when you’re drowning in debt with no sign of rescue, it may be your only hope—after all, no one can tread water indefinitely.
Bankruptcy isn’t a way to cheat the system. It’s a release valve for people with serious problems who need emergency help. Bankruptcy tries to guarantee that unmanageable debt won’t destroy your life and won’t disadvantage your children. When you’re so far in debt that getting current on your bills seems impossible, then you should consider starting over by filing.
Declaring bankruptcy can help discharge your debts, or at least reorganize them so that you can feasibly control them and pay them off. However, it doesn’t cover every single debt you may have. So, before you make the decision to pursue a bankruptcy, make sure that the stress and cost of filing will be worth it.
Bankruptcy Debt Exceptions
According to federal law, there are a few financial obligations that do not qualify for consolidation or discharge consideration. These obligations include:
Court-Ordered Financial Responsibilities
- Alimony and marital support. Just because you choose to file for bankruptcy doesn’t mean ongoing spousal payments are forgiven or stopped.
- Child support. Filing for bankruptcy will help forgive your debts, but not the responsibility you owe your children.
- Debts from personal injury while driving intoxicated. Court-ordered penalties are not subject for forgiveness through bankruptcy.
- Court-ordered fines or penalties for willful and malicious injuries caused to persons or property. Again, court-ordered penalties will not be forgiven by declaring bankruptcy.
- Post-filing debts. Debts that accrue after you file will not be discharged. Some debts that you acquired up to six months before filing may not be subject to discharge, depending on the circumstances. For instance, if it’s found that you accrued excessive debt because you planned on filing, those debts may not be included.
- Illegal or suspicious debts
- Loans obtained fraudulently
- Non-contractual debts
Government Mandated, Tax, and Miscellaneous Debts
- Some school loans. Some educational loans can be included in bankruptcy debts, but there are many exceptions, including most private student loans or any loan that is “funded in whole or in part by a governmental unit or nonprofit institution.”
- Tax liens. If the IRS puts a lien on your property before you declare bankruptcy, then that lien will remain no matter what.
- Attorney fees. No matter whether the debt was accumulated before, during, or after filing, attorney fees cannot be discharged.
Although bankruptcy law prohibits certain debts from being discharged, if you’re struggling with obscene amounts of credit card debt, domestic bills, and tax obligations, declaring bankruptcy may be the right choice for you and your family. Need more information about your bankruptcy options? Feel free to browse our site, or call us directly at 888-244-5957 for additional advice, guidance, and support.