Bankruptcy is supposed to be a fresh start but certain kinds of debt, most famously student loans, just won't go away.
The biggest benefit of bankruptcy is that most of your debt is cancelled by the end of the process. But if most of your debt falls under the category of "nondischargable," then filing may not help.
Before you make a final decision about bankruptcy, it's a good idea to talk to an attorney about your specific situation. But to get you started we put together a list of debts that you'd still be stuck with after bankruptcy, regardless of whether you choose Chapter 7 or Chapter 13.
- Student loans. Both the principal on the loans and the interest will not be discharged in bankruptcy. Keep in mind that this applies to government student loans and loans given by the government and serviced by a private bank. Separate private loans that you took out during school can still be discharged.
- Child support and alimony. Any kind of domestic support obligations will still be owed after you go through bankruptcy. Your future payments may decrease, but the money you owed in the past won't go away.
- Certain kinds of taxes. The government is generally unenthusiastic about forgiving the money you owe to Uncle Sam. Depending on the type of filing you pick, all or part of your tax money will still have to be paid.
- Debts related to fraud. Whether you committed fraud to get someone to lend you money or you committed fraud while entrusted with someone else's money, like embezzlement, you still have to pay. Courts are unwilling to punish the victims of fraud by taking away their right to collect.
- Certain kinds of court judgments. Besides fraud, other court-ordered payments won't be discharged in bankruptcy. That includes judgments from willful injury cases, wrongful death suits, or personal injuries that happened because you were intoxicated.
More questions about bankruptcy but not ready to call a lawyer yet? Ask an expert on our FindLaw Answers Forum.
- Discharging Credit Card Debt in an Arizona Bankruptcy (FindLaw's KnowledgeBase)
- Your Options When You Can't Repay Student Loans (FindLaw)
- Tax Debts Dischargeable in Bankrupcy: 3rd Circuit Breaks it Down (FindLaw's U.S. Third Circuit Blog)