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Are Outstanding Debts Exempt From Bankruptcy
Strange as it may seem for somebody filing for bankruptcy but some outstanding debts are exempt from the process. What this means is that regardless of the outcome of a bankruptcy process, you will still have to pay off these debts. This article will cover the main types of debts that are considered to be exempt and give you advise on how to determine what you will and won't have to pay for after the process is completed.
Strange as it may seem for somebody filing for bankruptcy but some outstanding debts are exempt from the process. What this means is that regardless of the outcome of a bankruptcy process, you will still have to pay off these debts. This article will cover the main types of debts that are considered to be exempt and give you advise on how to determine what you will and won’t have to pay for after the process is completed.
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.
IRS liens are another common debt that is not protected against in the courts. This occurs when you have to pay back taxes to the IRS but can’t afford to, so they put a lien on your house or take it out of your wages on a monthly basis. Sadly this sum of money can be quite large as it may stretch back many years and is not exempt from bankruptcy.
Since I have mentioned the government, it is important to understand that any government loan is exempt form bankruptcy. This includes things like student loans that were financed by the government.
On a final note, court orders that require you to pay an individual or creditor a specific amount of money that were handed down before the bankruptcy proceeding began are also exempt from bankruptcy.
These are some of the reasons why you should understand the full consequences of filing for bankruptcy. For instance, you may have a number of debts that can never be cleared by the courts. After all you don’t want to have a low credit rating, the stigma of filing for bankruptcy and still owe a huge amount of money to people.
Thus remember to get a firm understanding of your financial health before beginning such a process. You must quantify all you monthly outgoings and long term debts. With this knowledge in hand, you should determine whether your debt or outgoings fall into any of the mentioned categories.
What’s more, you need to find out if there are any court judgments against your name. In most cases you will be notified if a litigation process against you is beginning. Once again remember that the courts will not protect you against these should you file for bankruptcy.