NY Bankruptcy Non-Dischargeable Debt
If you are filing for bankruptcy, you are making a plan for financial recovery after the process ends. This will mean making a new budget for all of your expenses. The remaining debt will be part of this, so you will need to know what you will likely owe.
Certain debts that are never cleared by bankruptcy will influence your decision to file in the first place. What are they, and how can a bankruptcy lawyer help?
Dischargeable debts are things such as:
- Medical Bills
- Business Debts
- Personal Loans
- Credit Card Debts
- Rejected Leases
- Past-Due Utility Bills
- Civil Court Judgments
A dischargeable debt can be terminated in bankruptcy. Afterward, you will no longer be required to pay them. What’s dischargeable and the requirements for discharge will depend on the kind of bankruptcy you file. A creditor may dispute a discharge, so any debt can remain an obligation depending on the court’s decision.
The purpose of these proceedings is to be fair to both creditors and debtors. There are four types of bankruptcies you may file: Chapter 7, 11, 12, and 13. Chapter 11 is typically used for businesses, while Chapter 12 is only for farmers and fishermen.
If you file Chapter 7, you can lose properties tied to your debts, such as a vehicle or a house. If you do not want to give your property to the creditors, you can sign a reaffirmation agreement. The agreement will mandate repayment of the debt to allow you to keep the property.
Businesses filing Chapter 7 are usually liquidated. Anyone buying the business will be responsible for the debt. The other chapters, unlike Chapter 7, will restructure the debt to make it easier to pay it back.
As you think about your options, a bankruptcy lawyer in Brooklyn, New York, can help you navigate local laws, so you will be prepared.
Nondischargeable debts are those that bankruptcy does not erase. That includes student loans, child and spousal support, fines, and in most cases, taxes. Other debts that will not be cleared are:
- Debts for Injuries (caused by intoxicated driving)
- Loans (owed to pension, profit-sharing, stock bonus, or retirement plans)
- Unlisted Debts
- Debts Under a Reaffirmation Agreement
Although the above things are usually exempt from cancelation, there are some exceptions. Unpaid taxes can’t be discharged if they were incurred within three years of the bankruptcy filing, given that the tax returns were filed on time. This shortens to two years if returns are filed late.
Additionally, debts will not be forgiven if a debtor never filed a return, filed fraudulently, or committed tax evasion.
If a debt is not listed on a bankruptcy form, it is not discharged unless the creditor learns about it soon enough to challenge it. In other words, if a creditor learns about your bankruptcy filing too late, the debt will not be discharged.
Another exception is educational loans causing undue hardship. If the court deems this is the case, they can either cancel the debt, lower it, or adjust the payments, so it is not a hardship. The court will examine your finances to decide whether you made a reasonable effort to pay the debt.
If you want to learn more about bankruptcy or debt repayment, bankruptcy lawyers can help. Ursulova Law Offices will help you get started and answer all of your questions. Why go through all the mountains of paperwork by yourself when you have legal assistance to help you negotiate with your creditors? Call us today to set up an appointment with our bankruptcy attorney.