Special Debts - Student Loans/Child Support/Taxes
The great benefit of a Chapter 7 bankruptcy is that you can discharge almost any type of debt. However, there are a few exceptions. As a general rule, most student loans are non-dischargeable debt. Also, most tax debts may not be discharged, an exception is discussed below. Child support arrears may not be discharged, but a Chapter 13 bankruptcy may provide a limited measure of relief. I have provided information below about federal income tax debts and child support arrears.
To learn more about bankruptcy and your rights, contact an experienced bankruptcy attorney at the law office of Boruta. I have handled thousands of bankruptcy cases and bring to each case a wealth of experience in bankruptcy law and debt relief measures.
Federal/State Income Taxes
The Internal Revenue Service (IRS) is an aggressive debt collector. Through levies, wage garnishment, tax receipt interceptions, tax liens and countless other methods, they can take your money.
Unfortunately, most tax debts may not be discharged through bankruptcy. However, there is an exception. Taxes can be dealt with in a Chapter 13. If you filed your taxes on time and they are over three years old, they should be discharged in the bankruptcy. If the taxes are from the last three years, or there has been a lien, those taxes can be paid in full through the Chapter 13 without the penalties over the three to five years.
Child Support Arrears
You may not discharge child support arrears through bankruptcy. However, you may pay back child support arrears (debts for late child support payments) more gradually through the repayment plan of a Chapter 13 bankruptcy. This could be a significant benefit, as it may allow you to stop a wage garnishment.
While student loans cannot currently be eliminated through bankruptcy, you can make your student loan payments in a Chapter 13 with no interest or penalties. Additionally, Congress is now evaluating these laws and student loans may be easier to deal with in the future. That is why it is important to contact an experienced attorney who keeps up to date with the latest changes in the law.