For a lot of people, the bankruptcy process allowed them to financially get back on track and have a fresh start at life. Choosing to file a bankruptcy case is a legal issue, not a personal one. Getting a good local attorney can help you with the different types of bankruptcy, the actual bankruptcy procedure, and what you should look forward to after bankruptcy.

This article will briefly discuss debt forgiveness when you file for bankruptcy.

When you do decide to declare bankruptcy, several types of debt are forgiven. Under bankruptcy laws, however, the following may not be or are never forgiven:

  1. Generally, child support, alimony, and criminal fines are never forgiven.

Following bankruptcy law, child or spousal support (referred to as domestic support obligation) is never forgiven even if an individual has opted for bankruptcy. Only in very rare divorce cases where spousal support was meant to equalize the division of personal property can such be potentially forgiven. Experts on the bankruptcy code can explain this further to you.

In specific and limited circumstances, a claim from an accident (that took place when the debtor was drunk) could potentially be forgiven if there is no sufficient evidence that the blood alcohol content exceeded the lawful level. Criminal fines, however, are very unlikely to be forgiven despite your bankruptcy case.

  1. Certain student loans and income taxes may be forgiven if specific conditions are met.

bankruptcy filingIncome taxes can be discharged (or forgiven) if five conditions are met. Three of these simply require the passage of time. Here, the period between when tax returns are due (and submitted) and when you declare bankruptcy plays a crucial role. The fourth condition is that you did not willfully evade income tax, while the fifth is related to tax liens. An experienced bankruptcy lawyer can discuss this with you in more detail.

Meanwhile, a bankrupt individual can have a student loan forgiven if he or she can establish that it caused undue hardship. This undue hardship condition, however, is quite difficult to meet. The case is different for student loan-like debts.

  1. Some debts will not be forgiven if the creditor objects in time.

That, and if the bankruptcy court is convinced that bad behavior was engaged in while the debt was incurred.

Some people looking into debt-relief get confused on how this affects the debts that can be forgiven. As such, you should only get bankruptcy information from reliable sources. Generally, the bad behavior that creditors must prove is very specific and does not apply to a lot of people. It involves theft, misrepresentation, fraudulent activities, embezzlement, or intentional harm to the lender caused by the person in bankruptcy.

  1. Debts incurred after bankruptcy filings or those not listed or scheduled are generally not forgiven.

It is quite obvious that debts that did not exist until after your bankruptcy filing are not forgiven. Although some debts could be due after the bankruptcy was filed and you may not necessarily know the amount you owe, keep this provision in mind.

How they would be tagged as a liquidated or unliquidated, disputed or undisputed, or unsecured or secured debt at the time of filing will also matter. Generally, if there is a claimable right to repayment, the debt is covered by bankruptcy proceedings.

A debt that is neither scheduled nor listed will also likely not be forgiven. Include all debts and creditors in your bankruptcy petition paperwork. When you file bankruptcy completely and correctly, you benefit from bankruptcy protection and possible debt forgiveness. Getting bankruptcy lawyers from a trusted law firm can help you list all of your debts properly.

Do you need more information about bankruptcy? Call us now!

Countless of bankruptcy cases are filed each year. For questions on how to file, bankruptcies in general, or if you are seriously considering filing for bankruptcy, call us at Pasadena Bankruptcy Law. Getting an experienced bankruptcy attorney is your first step to having a better tomorrow.