Bankruptcy is an option for some people who need relief from the financial debts they are drowning under. However, it is not a one-size-fits-all solution, nor will it take care of all debts. Understanding what is not excused with Chapter 7 bankruptcy is just as important as knowing what debts it can resolve.
While bankruptcy offers a fresh start, it will not handle things like unpaid taxes, child support and alimony, and student loan debt. It’s often not up to the courts, either. Both Chapter 7 and Chapter 13 bankruptcy have their own rules and guidelines that must be followed, including what can and can’t be included or discharged. That’s why it’s important to understand the requirements and limitations of bankruptcy before you file.
Who Files Chapter 7 Bankruptcy?
Of course, the first determination is figuring out what type of bankruptcy is right for you. Chapter 7 is best for those who have fewer financial means and resources. In Nevada, and most states, you even have to pass what’s known as a means test to prove that you don’t earn enough income to be able to repay your debts. Those who fail the means test may be forced to file Chapter 13 or find another solution for debt relief.
Debts That Don’t Get Discharged
When filing Chapter 7 bankruptcy in Nevada, the following debts will not be discharged under any circumstances:
• Condo, co-op, or HOA fees
• Previous bankruptcy debts that were not discharged
• Alimony and child support
• Tax liens and certain unpaid taxes
• Any debts related to deliberate property damage or personal injury
• Debts related to OVI that result in injury or death
• Debts that are not listed in the bankruptcy filing
The good news, for most people, is that you can keep your car and your home, even if you file bankruptcy. You will have to continue making payments and reaffirm your loans, in some cases, but you will not have to give those up in order to file for bankruptcy.
After all, you need a place to live. And if you’re going to continue working to build a better financial future, the courts will want you to have a car so that you can get to and from work. There may be instances where you have too much equity according to state or federal bankruptcy laws, but for the majority of those who file Chapter 7, this isn’t an issue.
Some taxes that are really old may be able to be discharged, but you will have to get a special exemption from the court. It may be better to consult with a tax attorney. Student loan debt is also difficult to discharge unless you can prove that you are unable to maintain a minimum standard of living or something similar.
How to Proceed
If you want to make sure that your debts are properly handled throughout the bankruptcy process, you need an experienced bankruptcy lawyer on your side. Contact the team at DeLuca Associates for a free consultation to discuss how we can help you get your financial like back.