In the same manner that certain assets are typically not included as part of a consumer’s chapter 7 or chapter 13 bankruptcy filing, there are also certain types of debt and financial obligations which cannot be discharged via bankruptcy. These types of debts are exempt from bankruptcy law, and you still need to pay them, whether or not you file for bankruptcy protection.
For example, one type of financial obligation that cannot be discharged via bankruptcy is child support. If you have gone through a divorce or some type of divorce or separation settlement and you are required to pay child support or child maintenance by court order, the act of filing bankruptcy will not discharge this responsibility for you to continue paying it. Child support payments are exempt from any type of bankruptcy filing that the consumer might do, whether chapter 7 or chapter 13.
Another type of financial obligation that is exempt from being discharged by bankruptcy is an IRS lien. What happens with an IRS lien is that you owe income tax payments from one or multiple years. At a certain amount of money owed, the IRS will put a lien on your house or some other type of asset that you own, or in lieu of that possibility, may garnish your wages via your employer. This type of IRS lien, in addition to being exempt from a bankruptcy discharge, is also on your credit report for about 10 years as a huge blemish, which would be in addition to the blemish on your credit report from your bankruptcy filing. These types of red flags on your credit report can make it more difficult (although not impossible) to get approved for new credit in the future.
Another type of debt that is exempt from a bankruptcy discharge is a court order that may have awarded another company or individual a specified amount of money via a lawsuit brought against you. Since judgments such as these cannot be discharged, you should know if you have any of these pending against you that you have not been paying on, because they will not be discharged via bankruptcy.
If you are significantly behind in one or more debts with your existing creditors, chances are good that in time, one or more of those creditors will file a lawsuit against you to collect that outstanding balance that you owe them. This takes time and most creditors are not anxious to go to this extreme to collect money owed to them, but it cannot be ignored since most of them, in time, WILL go to that extent. If such a lawsuit occurs BEFORE you file for bankruptcy, then that will be a court order to pay the specified amount to that creditor, and that will NOT be discharged via your bankruptcy filing, since their lawsuit occurred before you filed. The bottom line here is that you need to take some action, because you could find that filing bankruptcy is not going to do you any good at all if you have multiple creditors with a judgment against you already.
Government loans such as federal student loans are also exempt from bankruptcy discharge.
If you are considering filing bankruptcy and have thoroughly investigated all your options, you should sit down with your debts and determine how many of them would be exempt from being discharged via bankruptcy. With the recent changes in bankruptcy law, this is no longer a do it yourself project. You need to be familiar with bankruptcy law, or if you don’t have time to study up on that, the money you spend on a good bankruptcy lawyer would be money well spent.
