For people who have significant debts, bankruptcy may be the best option for addressing their financial issues and ensuring that they will be able to meet their ongoing needs. Bankruptcy is a form of debt relief that is available to all Americans, and it may allow multiple different types of debt to be discharged, meaning that a debtor will not be required to repay the amounts owed, and creditors cannot take any actions to collect money from a debtor. Multiple different types of debts may be discharged through bankruptcy, including credit cards and medical bills. Secured debts such as a home mortgage or auto loan may also be discharged, although this will typically result in a foreclosure or the repossession of property. However, debtors should be aware of different types of debts that cannot be discharged through bankruptcy. These include:
Domestic support obligations – If a person is required to pay child support to ensure that their children’s needs will be met, or if they were ordered to pay spousal maintenance (alimony) following their divorce, these obligations will remain in place. In addition to making ongoing payments as required, a person will be required to make up any payments that have been missed, and interest may be charged for these past-due amounts. While bankruptcy cannot eliminate these obligations, it may provide a person with funds that would otherwise have been used to pay off other debts, ensuring that they can meet their ongoing requirements.
Most tax debts – If a person owes money to the IRS, they will usually only be able to discharge debts from at least three years before they filed for bankruptcy. Failure to file tax returns on time may disqualify these debts from being discharged.
Most student loans – Most of the time, a person will be required to repay all student loans that are owed, including both federal and private loans. In rare cases, a person may seek a discharge of student loans because of undue hardship, such as by showing that the requirement to make ongoing loan payments would prevent them from maintaining a minimal standard of living.
Fraudulent debts – If a person obtained credit or took out loans through false pretenses, such as by knowingly providing false information to a creditor, these debts may not be discharged. Debts related to the purchase of luxury goods or services totaling more than $500 that were taken out within 90 days before filing for bankruptcy and cash advances of more than $750 on a credit card or other loan that were taken within 70 days before filing for bankruptcy cannot be discharged.
Payments for injuries – If a person willfully and maliciously injured a person or their property, debts related to this injury cannot be discharged. If a person caused someone else’s serious injury or death because they were driving while intoxicated, they cannot eliminate their obligation to pay a judgment to the victim.
Contact Our Hudson Valley Bankruptcy Attorney
If you have questions about how your debts will be handled if you file for bankruptcy, or if you want to know what steps you will need to take during the bankruptcy process, Law Offices of Robert S. Lewis, P.C. can provide you with the legal help you need. We will work with you to ensure that you will be able to eliminate your debts and get back on the right financial track. Contact our Rockland County bankruptcy lawyer today at 845-358-7100 to set up a free consultation.