Debts That Linger: Chapter 7 And Dealing With Non-Discharged Debts

25 January 2018
 Categories: , Blog

While a chapter 7 bankruptcy is an amazing tool in your efforts to move forward with a fresh financial beginning, you should be aware of some types of debts that require special attention. As you may know, credit card debt is one of the largest debts most consumers own, and the beauty of chapter 7 is the opportunity to say "so long" to all of that. Read on to learn about a few types of debts that may only be discharged under certain circumstances and which ones you'll need to deal with outside of bankruptcy.


Uncle Sam usually wants to be paid what they are owed, so if you have certain types of tax obligations you may need to make other arrangements. The good news is that if your tax debt is over 3 years old, you can include it in your bankruptcy unless that debt (taxes, penalties, and interest) was connected to a fraudulent return. In some cases, the IRS places liens on property when you owe them money, so if you already have a lien on a piece of property when you declare bankruptcy, it will remain until you pay the debt.

If you owe money on a more recent tax return, the IRS has two solutions to help you. You can request an installment plan, where you are able to make regular payments on your tax debt. The other solution is more radical but may work for some. The offer in compromise amounts to you making an offer that aligns with your net worth.

Student Loan

While, in general, it's more difficult to include a student loan in with a chapter 7 bankruptcy, it is possible if you can pass through three gateways. Regardless of whether the loan was private or government-sponsored, you must be able to show all three of the below:

1. Up until this time, you must have had an excellent record of paying your loan on time.

2. If you were forced to continue paying the loan, your standard of living would become difficult or impossible to maintain.

3. If you were forced to continue paying the loan, the financial hardship would last the full amount of the repayment period.

Child Support

The courts take this particular debt pretty seriously, so there is no way to include money owed for a child support obligation to your chapter 7 bankruptcy. Additionally, any liens placed on property or wage garnishments as a result of this burden will not be removed with a bankruptcy. If you have fallen behind, talk to the enforcement agency about making payments to get caught up, and if your financial circumstances have undergone a major change, check into getting your support amount altered.

To learn more, contact an attorney like Jeffrey S. Arnold, Attorney at Law, P.C.