Filling Bankruptcy? Know Different Non Dischargeable Debts

Filling Bankruptcy? Know Different Non Dischargeable Debts

After incurring large debt by many Americans during this tough time, many are finding a way to get rid of that debt with bankruptcy. But, during the overhaul of 2005 bankruptcy laws has changed that does not cover all the debt for intoxicant of discharge, which was once upon a time considered as a fresh begin of finance after filing bankruptcy. Contrary to that, not all debts are dischargeable regardless of your bankruptcy filing options.

For debts like student loans issued by federal government called as secured student loans, mortgages, taxes, child support regardless of the bankruptcy option you filed, you must make a repayment plan to pay off rather than these debts are absolutely discharged. In such cases, the court you filed bankruptcy petition will appoint a trustee to liquidate all your assets and use the proceeds to pay of the creditors. The changes of bankruptcy laws were driven in a way to prevent the abuse of system to get rid of debt and harm the financial system.

Therefore, the bankruptcy filing does not solve all of debtor’s financial problems. The changes brought to law as the court sees that allowing discharging such debt could affect the nature of the society and are made non dischargeable debts in a typical bankruptcy filing. The main intention behind changing these laws is that people can not relinquish their obligations to pay such as alimony, child support and any other debts that contribute to welfare of the society.

Student loans are also added to this list because of the amount of money that is allowed each year for college education. These are loans that is very hard to get discharged with bankruptcy. Until recently, these are part of debts that are discharged with bankruptcy, but current overhaul of bankruptcy in 2005 have changed the laws.

Here is the list of debt that can't be discharged with bankruptcy filing:

Taxes: the taxes that are due to federal, say or local and municipal taxes that are due within last three years are not discharged with filing any chapter of bankruptcy.

Student loans: the student loans that are issued by federal government are not discharged with bankruptcy that has been in repayment position for at least seven years. In some rare cases, even though this type of loans is not discharged with current changes to bankruptcy laws, some older student loans can be discharged provided if a serious hardship exists.

Fraudulent debt: if court finds that the debt incurred was illegal then that will not be discharged. For example: if you have incurred credit card debt shortly before filing bankruptcy that is if you are filing bankruptcy within 90 days of incurring debt then the court will refuse to discharge that debt with bankruptcy.

Alimony and child support ordered by court are not discharged until and unless the recipient concurs to it. This debt is not discharged as this kind of actions will harm the nature of society.

These are some of the debts that are not discharged with bankruptcy with interest of the recipient of the payments.

Life After Bankruptcy, Do I Have One?

At some point after the completion of your bankruptcy proceedings you will one day want to get a loan or refinance current debts.  With the valuable lessons learned from the past, this should make you financially weary.  We will go over the steps you’ll need to take to get back on track, if you are planning to refinance or obtain a loan after bankruptcy.

Many people go into debt and have no problem paying their bills. Some grant their debt to grow to the point where the debt ruins them financially.  While having debt can ruin you financially and is quite unsettling for most, it is definitely not the end of the world.  After everything has settled, and the former creditors are satisfied, here comes that “fresh start”. This is when refinancing after bankruptcy comes into play.  It takes time to rebuild yourself after bankruptcy, in most says bankruptcy can reported on your credit report for up to 10 years, but within the first year or two you should start seeing signs of relief if you take the necessary steps and make wise financial choices post bankruptcy.

If after bankruptcy you have been re-establishing yourself and can show a strong pay history then it is more likely you will be successful with getting a new line of credit. Late payments on bills are not a good sign to creditors especially after bankruptcy. Make sure you pay your bills on time and have good repay history to show.  Paying your bills on time can be as simple as not living above your means and limiting yourself to only one credit card for emergency funds purposes only.

Showing good credit history after bankruptcy is imperative and being responsible with your credit can show the banks a positive side of you.Other than rebuilding your credit history you will also be tasked with removing any erroneous information found on your credit report.  This mean you will need to continually obtain a copy of your credit report from the 3 major credit bureaus.  Removing erroneous information from your credit report is not an simple chore, as credit bureaus are slow to do this, it is necessary to wipe out the lists that might be on your record of collections performed against you.

Make sure to file disputes and follow through on anything that is not correct on your credit report. This will help you with refinancing and obtaining loans after bankruptcy by raising your credit score.One more thing that might help after bankruptcy is the “loan to” value or LTV of your property, usually a house. A loan is given using this process primarily by adding up the cash value of your property. You can get a loan this way and pay off any outstanding taxes that have remained after your bankruptcy. Tax liens against your property will usually last until they are paid, even if you have successfully undergone bankruptcy.

There are loan officers and mortgage lenders that specialize in loans and refinancing for post bankruptcy creditors who can help you. Once you learn what to anticipate when you attempt to get a loan or refinance after bankruptcy, you will be back into the normal swing of things in no time.  All it takes is a tiny knowledge and time to correct the errors of the past, and you will be enjoying that “fresh start” that you have been looking for.