What Kinds of Debt Can't Northern and Central New Jersey Residents Easily Have Discharged in Bankruptcy?

For people struggling with the weight of debt, the idea of filing for bankruptcy, having that debt “forgiven,” and starting again with a clean slate can be a huge relief. Unfortunately, not all debt is easily dischargeable (i.e. eliminated) in bankruptcy. Attorney Douglas Mitchell takes care to advise his Northern and Central New Jersey clients that some common financial obligations – obligations like the following – must often still be met, bankruptcy or no:

Child Support and Alimony Payments

Child support and alimony payments can never be discharged in bankruptcy because they’re considered a priority debt. Bankruptcy cannot discharge obligations to pay past-due child support or alimony payments. However, by discharging other debt, bankruptcy may free up cash flow, which can make it easier to make these payments.

Criminal Penalties and Restitution

If you owe fines, other penalties or restitution (money you’re ordered to pay back to the victim of a crime) as part of a criminal sentence, these amounts cannot be discharged in Chapter 7 bankruptcy. Under Chapter 13 bankruptcy, however, they can be paid out over time.

Most Tax Debt

Don’t count on tax debt being discharged in bankruptcy. Since nothing is as certain as death or taxes, tax debt is dischargeable only in very specific circumstances. Even if a Chapter 7 bankruptcy eliminates your obligation to pay the debt, any tax lien filed on your property will remain.

Student Loan Debt

It’s also very difficult to discharge student loan debt in bankruptcy. To do so, you must show that payment of the debt will impose an undue hardship on you and your dependents. The standard for what is an “undue hardship” is relatively high.

Debt Associated with Death or Injury Caused by DUI

Bankruptcy cannot discharge debt for death or personal injury caused by your operating a motor vehicle while under the influence of alcohol or drugs.

If filing for bankruptcy seems a necessary course of action for you, it’s wise to consult with an experienced bankruptcy attorney who can help you sort out which of your debts are and are not dischargeable. Here in Northern and Central New Jersey that attorney is Douglas Mitchell. Contact Mitchell Law Offices today.