The good news: most of what weighs people down is dischargeable — credit cards, medical bills, personal loans, payday loans, old utility bills, deficiency balances after repossession, and most lawsuit judgments. A Chapter 7 or Chapter 13 filing can wipe out or reorganize these.
Older income taxes can sometimes be discharged if the return was due more than three years ago, was filed on time, and meets other conditions. Student loans require a separate “adversary proceeding” to prove undue hardship — difficult, but not impossible in the right case. We review both carefully during your consultation.
Sometimes. Income tax debt may be dischargeable if the return was due at least three years before filing, was actually filed at least two years before, was assessed at least 240 days before, and does not involve fraud. Payroll taxes and penalties for fraud cannot be discharged.
Rarely, but it does happen. You must file a separate court action and prove that repaying the loans would cause an undue hardship. Recent court trends have made this somewhat more attainable for borrowers who genuinely cannot repay.
A debt you fail to list on your bankruptcy schedules may not be discharged. This is one reason to work with an attorney who makes sure every creditor is included.
Attorney Alex Ranjha (JD/MBA) offers a free, confidential consultation. Flexible payment plans. Se Habla Español.
