It’s incredible how quickly debt can accumulate. It starts as a manageable monthly expense but can soon snowball into an overwhelming avalanche of bills.
Even though you may be reluctant, filing for bankruptcy may be your only option. However, it’s first important to know which debts can’t be discharged in bankruptcy.
In most cases, student loans are not dischargeable in bankruptcy. The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 made it difficult to discharge these debts unless you can demonstrate “undue hardship,” which is a challenging standard to meet.
Some exceptions exist, such as a student loan from a private lender.
Certain tax debts usually can’t be discharged. If the tax debt is less than three years old or if you committed tax fraud or evasion, you will still owe these debts after bankruptcy. However, older tax debts might be dischargeable under specific circumstances.
Child support and spousal support
The courts consider child and spousal support obligations a priority, and filing for bankruptcy will not absolve you of them.
Debts incurred through fraud
If you acquired any debts from false pretenses, false representations, or actual fraud, they can’t be discharged by bankruptcy. The government believes these types of debts are due to moral turpitude or criminal conduct. Therefore, the debtor should be held accountable for them.
These are just some examples of the types of debts that can’t be discharged through bankruptcy. Working with someone who can help you understand your options is crucial. Bankruptcy is a complex process, so it’s essential to make informed decisions.