Thursday, February 9, 2017
Does Bankruptcy Wipe Out Back Taxes?
The benefit to filing for bankruptcy is that you are able to reduce or eliminate most of your debt. When you have less debt to pay each month, your paycheck goes farther and you are able to plan for the future. But not all of your debts are going to be wiped out by filing bankruptcy, so before you file a case you should know what could still be due after your case is over.
Some of the debts that will remain after you file a bankruptcy case include:
● Student loan debts: while there is case law to support discharging your student loan debt, the test is strict and can be difficult to meet for most people. So, if you are looking to get rid of your monthly student loan debt by filing for bankruptcy, you should expect a high level of scrutiny over your financial condition.
● Past due taxes: taxes typically remain due when you file for bankruptcy.
● Child support: you cannot get a discharge of your child support debt by filing for bankruptcy. Even when your case is over and most other debts are no longer due, you will still be responsible for making your child support payments.
● Certain fines and penalties: if you have certain types of judgments against you from a state court civil or criminal action, these fines and penalties will remain due after bankruptcy. A good example is any restitution you have been ordered to pay as a result of willfully damaging the property of another person. This might be from a personal injury case, or even a DUI.
It is rare to have a case where the majority of your debt is still due after the bankruptcy ends, but you should be aware of what will remain and what will be eliminated. The good news is that a large chunk of your unsecured debt, if not all of it, can be wiped out by filing bankruptcy. For most people, it is making payments to several credit cards that bust the budget each month and with those payments no longer due, real headway can be made in your finances.
If you have more questions about bankruptcy, contact us at www.law-ri.com. We will help by coming up with solutions that work for you and have multiple locations to meet your needs for office visits.