It is never easy to make the decision to file for bankruptcy. However, it may be your only option if you cannot create a budget that will get yourself out of debt over the course of the next five years. If you file for bankruptcy, you should know that going to bankruptcy court could be a difficult task. This is because a lot of your debts will be discharged under bankruptcy, though there are several debts that cannot be discharged. These are debts that you are going to have to continue to pay off even after your bankruptcy has been discharged.
Alimony and Child Support is Still a Priority
Don’t expect to get out of alimony or child support obligations in bankruptcy court. Under the Bankruptcy Abuse Prevention and Consumer Protection Act, these debts are of the highest priority and collection efforts will continue on these obligations even after bankruptcy relief is sought.
Back Taxes Must be Paid
Under the old bankruptcy laws, if you filed for Chapter 13 bankruptcy, back taxes were figured into the Chapter 13 repayment plan. However, the new Bankruptcy Abuse Prevention and Consumer Protection Act changed this and back taxes are no longer dischargeable.
How Student Loans Add Up In Bankruptcy Court
You can no longer discharge any student loans unless you are now completely unable to work. This is different now than in the past because it used to be that private student loans could be discharged under a Chapter 7 bankruptcy. However, The Bankruptcy Abuse Prevention and Consumer Protection Act now gives private loans the same standing as government-guaranteed loans. So, the only way in which to have your student loans discharged now is to prove that repaying them is an undue hardship on either you or your family, which can only be done whenever you prove that you are no longer able to work either due to a serious illness or because you have been in a severe accident.
Conclusion
The decision to file bankruptcy can be a tough one and understanding the new bankruptcy laws can be confusing and frustrating. A person seeking bankruptcy relief should seek the help of an experienced bankruptcy attorney to ease them through the process. Filing bankruptcy may be a tough process but one that will ultimately relieve you of some of the burden of your debt.