When people begin the process of filing for bankruptcy, the most common thing we hear is that they didn’t realize that not all of their debt could qualify to be discharged. In fact, there are several types of debt that cannot be discharged according to the law. There are also other types of debt that you may not want to discharge, and there are ways to help reduce the strain so that you can continue to pay those. These are the debts that a bankruptcy in NYC cannot discharge.
If a debt is connected to a tangible asset, such as your mortgage or car loan, then a bankruptcy can’t stop that lender from repossessing the asset. Bankruptcy can eliminate the debt, but the creditor still has the right to claim the property. In many cases, a person undergoing a bankruptcy can request that their mortgage or car payment be deferred until their bankruptcy is over – this helps them get back on track after their other debts are discharged.
Legally Appointed Payments
Payments such as child support, alimony, and other payments that were appointed by a court of law cannot be discharged in a bankruptcy. This includes things like traffic tickets, criminal restitution, etc. If you file a Chapter 7 bankruptcy in NYC, you will still have to pay these debts in full on your own. If you file a Chapter 13, these debts will be added to your plan and paid in full through the trustee.
One of the biggest down sides for many when it comes to bankruptcy is that it cannot get rid of student loans for most people. Student loans are made by the government, and the government doesn’t usually allow people to not pay them back. If a person can adequately prove that paying back their student loans would cause them undue hardship, then they may be able to get a rare discharge.
Just like student loans, the government doesn’t usually allow any tax debt to be eliminated in a bankruptcy. There are very strict guidelines to follow for the few cases where tax debt would be discharged, and if you didn’t do everything perfect in the past, before you ever knew you would need a bankruptcy, then you likely won’t make the cut.
Debts You Don’t List
If you forget to include a debt in your bankruptcy schedule, it is still automatically wiped out unless you left a debt out on purpose. For the most part been innocently left off debts are discharged.
Debts Previously Denied
If you’ve filed bankruptcy before, and a debt was declared non-dischargeable, it is automatically excluded from being discharged ever again. This means that even if you can now prove that your student loan is causing undue hardship, you won’t be able to have the debt discharged if you already had it denied in a previous bankruptcy filing.
So What Can Bankruptcy Do?
Bankruptcy is generally focused on getting rid of unsecured credit card debt, certain types of income tax debt, and medical bills.
Do you want to learn more about what bankruptcy can do for you? Call my office at 212-244-2882 to schedule a consultation. Even if you believe your debt falls into one of these categories, we may still be able to help you climb out of the hole you’re in with a Chapter 13 bankruptcy.