Bankruptcy Doesn't Work on Some Kinds of Debts

No.

Debts for "an educational benefit overpayment or loan made, insured, or guaranteed by a governmental unit, or made under any program funded in whole or in part by a governmental unit or nonprofit institution" means federal student loans (FFELP and FDSLP loans) are not bankruptable.

However, some bank loans or unsecured loans such as credit cards that are used for paying higher education expenses may be discharged under bankruptcy laws.

A judge can decide to discharge your loan if you file an undue hardship petition. Here are the three qualifications for the petition:

• Based on your income and current expenses, you cannot both repay your student loan and maintain a minimal standard of living.
• This situation will probably persist for most of the student loan repayment period.
• You have made sincere efforts to repay your student loans.

No. If you file bankruptcy, you still owe alimony and child support.

In light of insurmountable financial hardship, you can request that a judge reconsider your alimony obligations. If you do this, be prepared for your ex-spouse to request more money for child support.

If you file Chapter 7 and can't pay alimony, you might also try having a bankruptcy lawyer help you file Chapter 13. If your exempt debts (student loans, alimony, etc.) exceed your income, Chapter 13 will allow you to clean up your debts via a payment plan. You will pay a portion of the alimony as part of your payments, and then when you finish your Chapter 13, you will owe the full amount of alimony. (Other than this, you'll be debt-free.) If you understand that alimony accumulates during your Chapter 13 and you prepare by saving up for it, you should be fine.

Bankruptcy won't erase child support debts either. Like alimony, filing Chapter 13 offers a temporary reprieve from your payments, but remember that child support is an obligation, so your wages can be garnished. If the court orders wage garnishments, nothing can be done. However, your employer cannot discriminate against you for having garnished wages.

For the most part, no. Sometimes older, unpaid income tax debts are dischargeable, but only if they meet strict criteria. Most tax debts just can't be erased -- you'll either still owe them when you're finished with a Chapter 7, or you must fully repay them in your Chapter 13 repayment plan.

If you must discharge tax debt, Chapter 7 may be an option if your debts qualify. Federal income tax debts may be dissolved in Chapter 7 bankruptcy if all of these conditions are met:

• The taxes must be income taxes. Bankruptcy will never eliminate fraud penalties or payroll taxes.
• You didn't willfully evade paying your taxes or file a fraudulent return. If you did something like use a false Social Security number when you filed, bankruptcy won't help you.
• You must have a debt that's at least three years old. The tax return was originally due at least three years prior to when you filed for bankruptcy.
• You have actually filed your tax return. You have to have filed your return for the year you want to discharge at least two years prior to filing for bankruptcy.
• You must pass the 240 Day Rule. The IRS assessed the income tax debt at least 240 days before you filed a bankruptcy petition.

• any of the debts you didn't remember to list in the bankruptcy papers
• debts you incur in a personal injury or accidental death lawsuit due to drunk driving
• fines or penalties imposed for law violations (for example, traffic tickets or criminal restitution)

To speak to a bankruptcy lawyer in the Hollywood or Pembroke Pines, Florida area, call Mary Jo Rivero at (954) 251-0349.

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