Though it can have negative impacts, bankruptcy is ideal for those drowning in an overwhelming amount of debt. However, it’s a common misconception that all debt a person owes will be discharged when they file. This is untrue, as non-dischargeable debts will not be forgiven, leaving you in a precarious situation. So how do you deal with it? Keep reading to find out and discover how a Memphis, TN consumer bankruptcy lawyer can help you navigate these issues.
What Are Non-Dischargeable Debts?
Non-dischargeable debts are owed funds that are unable to be eliminated during bankruptcy. These debts have already been determined to be un-dischargeable, meaning a collector can pursue them until the debt is paid, and bankruptcy will not get rid of these debts. There are a number of debts that can fall into this category, including, but not limited to:
- Personal injury debt
- The majority of taxes
- Child support
- Debts left out of the bankruptcy petition
- Attorney fees
- Fines owed to the government
- Loans taken out against retirement accounts
- Criminal restitution
- Student loans
It’s also important to note that secured debts are usually non-dischargeable. However, you may be able to file Chapter 13 bankruptcies for secured debt. This allows you to catch up on payments or return the asset.
What Can I Do?
If you have non-dischargeable debt, understanding your legal options is essential. Though you will still owe some debts, doing what you can to dismiss all possible debts can help you achieve financial freedom.
Many of these debts occur because they are not listed in the bankruptcy petition. Ensuring that you have an attorney review your bankruptcy petition can help you avoid getting stuck with debts that could be forgiven, as it’s vital to ensure that you write every debt owed on the petition.
There are also some instances where a creditor may, under Chapter 7 bankruptcy, be able to object to the discharge of a debt. These include cash advances, the purchase of luxury items (fraud), or debts from divorce settlements. The most common are luxury items that the creditor may pursue as fraud. If they petition the court and convince them that you did not plan on repaying the debt, you may be held responsible. Generally, these debts are purchases over a certain threshold, usually $650, made within 90 days of filing bankruptcy. However, with the help of an attorney, you may be able to prove that you had all intentions of paying this charge back, allowing you to have the debt dismissed.
When you need help with your bankruptcy proceeding, the Arnold Law Firm can help. Our dedicated legal team will examine your circumstances to help ensure you can achieve the best possible outcome for your circumstances. Contact us today to learn more about how we can help you navigate this complex situation.