Debt Exempt From Bankruptcy

By: Adrian Fletcher

Despite the fact that you are declaring bankruptcy, you may be surprised to find out that certain debts are exempt from this process. What this means is that no matter what the outcome of a bankruptcy hearing, you will still have to service or pay these debts regardless. This article will give you some common examples of debts that are exempt and advise how you should proceed if you are contemplating bankruptcy.

One controversial area of debt exemption is that dealing with child or maintenance support. If you are paying or have been ordered to pay these moneys by a court then they are generally considered to be exempt from bankruptcy. Again, this means that you will have to find money to pay these regardless of if you have successfully filed for bankruptcy. This includes all the law chapters, including Chapter 7 and Chapter 13. Sometimes people will file as they see this as a way to avoid their responsibilities but this will not help them. Rather they will have to come up with all the outstanding money.

Another instance of a debt exempt from bankruptcy is IRS liens. If you have been subject to a tax audit that has led to you having to pay more taxes, then the IRS may put a lien on your home or take a portion of your wages. Unfortunately this can often be a substantial amount of money that you will have to owe the government and no bankruptcy law can protect you from it.

Whilst covering the government, it should also be noted that any government loans are generally considered to be exempt from bankruptcy. Remember that this applies to student loans that are covered by the government too and are a common form of finance for young people.

Finally, any court orders where you are ordered to pay an individual a specified sum of money are also considered to be exempt from bankruptcy.

These are some of the reasons why you should go into the process of bankruptcy fully aware of your responsibilities and the limits of the laws. For example, you could well have more debts that the courts can't do anything about. It would defeat the purpose of filing if you ended up with a low credit history and still had a huge outstanding debt with people.

Before going down this route you should conduct a thorough audit of your finances. You should qualify all your outgoings and your current monthly income. If any of the outgoings are any of the above them you may want to reconsider filing for bankruptcy.

Additionally, you should find out if there are any outstanding judgments awarded by courts against you. You will be aware of this (even if you have chosen to forget it) as the law requires you to be notified if any litigation process is begun against you. To clarify, you can't be protected by the bankruptcy law against these types of debts.

Article Source: http://www.share.onlypunjab.com

Get more on filing for bankruptcy, especially exempt assets for bankruptcy and debt exempt from bankruptcy . Adrian discusses dealing with debt.

Please Rate this Article

Not yet Rated