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Many people believe that declaring bankruptcy clears all their debts and gives them a fresh start. However, this is rarely the case. In fact, bankruptcy usually involves liquidating your assets, and certain debts cannot be discharged through bankruptcy.
Super Savings Tips, a personal finance website, outlines several types of debt that cannot be discharged in bankruptcy. For instance, student loans typically remain intact, although there may be exceptions for extreme financial hardship. In most cases, however, student loans will remain with you even after filing for bankruptcy. Other debts that fall into this category include:
Government-related debts:
If you've been fined or penalized by the government, bankruptcy won't eliminate these debts. No relief can be provided, and you will need to settle those fines and penalties, or they will follow you for life. For more guidance on how government debts are treated in bankruptcy, it's advised to consult an attorney.
Child support and alimony:
Payments for child support and alimony are not dischargeable in bankruptcy. These payments are meant to cover essential living expenses for your child or former spouse. However, debts arising from the division of marital property are not included in this category. In certain states, these debts may be dischargeable in bankruptcy.
If you recently bought a car
: Have you purchased a car or an expensive piece of jewelry prior to filing for bankruptcy? If so, you have two options: you can continue making payments to the lender, or you can surrender the item back to them.
For most individuals and businesses, bankruptcy is seen as a last-ditch effort. It’s also often widely misunderstood. For more information, check out the full post via the link below.
Photo by Markus Spiske raumrot.com.
