What Cannot Be Discharged?
Lay-offs, company closures, cutbacks, and outsourcing have placed many individuals into a state of financial distress from which they may not recover. Despite changes in the law that make it harder and more costly to declare bankruptcy, many people are still finding that bankruptcy protection is the only solution to their financial problems. However, while a bankruptcy filing is intended to grant an individual an “economic fresh start,” the person filing bankruptcy needs to be aware that not all obligations can be discharged through this process.
Taxes for the current and previous three (3) year period cannot be discharged through bankruptcy. This includes federal, state, and local taxes, as well as any resulting interest, penalties, and fines. In addition, non-tax-related penalties and fines owed to nearly any government entity are also not covered by a bankruptcy discharge. This includes items such as traffic tickets, criminal fines, and probation costs.
Also not eligible for discharge are any debts that the consumer fails to list on the bankruptcy petition, unless the creditor was provided with notification by the bankruptcy court or other interested parties. This is one of the many reasons that the services of a qualified attorney specializing in bankruptcy law are critical in this process.
Debts such as child support, alimony, and other Family Court ordered debts are exempt from a bankruptcy discharge. Student loans are rarely allowed to be discharged. To discharge these debts, a debtor must prove “undue hardship,” which is a very difficult standard to meet in the eyes of the bankruptcy court.
Money owed to creditors for “luxury purchases” of more than $500 that occurred within ninety (90) days of filing are also not discharged in bankruptcy, as is any debt that was incurred fraudulently.
For more information about filing Bankruptcy contact Attorney Henry V. Boezi.