Being in debt can give you sleepless nights. If you are overwhelmed by debt, one of the options you may consider is declaring bankruptcy. At the very basic, bankruptcy is a legal process that allows individuals and businesses struggling with debt to find relief.
However, not all debts are created equal. It is important to understand that some debts cannot be wiped off with bankruptcy. Here are some of the debts you will need to pay even after declaring bankruptcy.
Spousal and child support
During the divorce process, the court may issue child support and alimony payments as part of the divorce terms. If an individual falls behind in these marital debts, they may not seek to have them forgiven through bankruptcy. And if you are filing for Chapter 13 bankruptcy, you will be required to come up with a payment plan for these debts.
Income tax debts
The government expects you to “give to Cesar what belongs to him.” However, if you are unable to pay debts arising from your taxes, you may seek relief through bankruptcy. For this to happen, the following conditions must be met:
- The tax debt must be older than 3 years
- You must have filed the tax return related to the debt with the IRS within the past two years
- The IRS must assess your tax debt within 240 days before declaring bankruptcy
The bankruptcy court will review your case against these three conditions before ruling on your petition.
Fines and penalties imposed by the court
Alongside taxes, you cannot use bankruptcy to avoid paying dues owed to the government. These include fines and penalties imposed on you following an offense. The same applies to court awards following a successful personal injury lawsuit against you.
Bankruptcy is usually a welcome relief to individuals and businesses that are plagued by debt. However, before taking this route, it is important to find out if the debts in question are dischargeable via bankruptcy or not.