You get a fresh start on your financial life after bankruptcy. Now, you forge ahead with an improved financial and life plan in hopes of building up your savings, improving your credit rating and swearing off any old spending habits that may have gotten you there. But you also are relieved.
Bankruptcy provides you with a nearly clean slate by wiping away many of the debts you accumulated. Credit card debt is gone. So is debt from medical expenses, personal loans and utility bills. However, some debt is non-dischargeable. You continue to be responsible for paying for debt related to child support, alimony and most taxes. There are a few other things, too.
A list of certain non-dischargeable debt
Even after you file for personal bankruptcy, you remain responsible to pay for debt that includes:
- Alimony: If your divorce decree requires you to pay alimony to a former spouse, you must continue to do so. However, in some situations, payment modifications may take place.
- Child support: Your child is your dependent and will continue to be until he or she is 18. You must continue providing payments for basic needs, education and medical costs and many other things.
- Recent federal, state and local taxes: This list includes tax liens. Some taxes that date back several years may be discharged.
- Student loans: Typically, student loans remain after bankruptcy. However, there are some situations in which they are discharged. Courts may discharge student loan debt if it causes “undue hardship” to the debtor and dependents.
- Debts related to “willful and malicious” injury to a person or property: This is when someone deliberately and intentionally causes harm to another.
- Money owed to the government: This may include restitution, fines and penalties. Fines for traffic tickets and criminal offenses are in this group.
- Debts related to injuries or wrongful death caused when driving under the influence of alcohol or drugs: This is serious and will not go away.
- Debts stemming from breach of fiduciary duty, theft and embezzlement: Some cases of breach of fiduciary duty are criminal offenses but often are civil court matters. Theft and embezzlement are criminal offenses.
Bankruptcy provides a path to a new direction. It erases most bet, but some debt will remain. Just remember that you now have better control after filing for bankruptcy.