Filing for bankruptcy is a legitimate option for people struggling with debt. It provides an opportunity for a fresh start.
However, it is important to have accurate information before filing. For example, many people wonder if filing for bankruptcy clears all debts. In short, the answer is no. Some debts remain non-dischargeable. Here are some important factors to consider.
Non-dischargeable debts
Some debts are non-dischargeable during bankruptcy proceedings. These include:
- Child support and alimony: If a filer owes child support or alimony, these debts are not discharged during bankruptcy. They must still be paid according to the ruling of the family court.
- Some taxes: In Massachusetts, recent income tax debts cannot be discharged in bankruptcy. Federal and state income tax from the last three years before filing must still be paid.
- Student loans: Generally, student loans are not dischargeable. The only exception to this is if paying the loan back would cause undue financial hardship, which can be a difficult standard to prove.
When filing for bankruptcy, it’s important to carefully assess what types of debt you owe. Bankruptcy does not necessarily clear all outstanding financial obligations.
Property liens
Bankruptcy can discharge secured loans, but it does not clear a lien on a property. Defaulting on payments could still result in repossession or foreclosure on assets like houses and vehicles.
Debts post-bankruptcy
Bankruptcy can only clear debts that were incurred prior to filing. Any debts post-filing must still be paid according to their terms.
With careful research, bankruptcy can be a great option for starting afresh. To ensure you are armed with all the relevant information, it will help to seek legal guidance.