Filing Bankruptcy - Understanding Non-Dischargeable Debts

Many people have the misconception that filing bankruptcy will erase all their liabilities. There would be no obligation to pay the amounts that they owe to their various creditors. However, this not true at all. There are certain kinds of loans that have been considered as non-dischargeable ones. Filing under chapter 7 will eliminate all kinds of debts but you would still owe the non-dischargeable ones. Depending upon your specific case and the judgment of court, there can be a wide range of such debts. Following are some of the most common ones.
Student Loans
No matter for whatever reason is that you have been forced towards filing bankruptcy, educational based debts such as student loans cannot be exempted. These may include loans for board, room, books, tuition etc. Even if the court grants your petition and orders for the liquidation of all your assets, you will still be liable to pay these loans off. However, there is a rare exception, as per which if you are able to prove the bankruptcy court that the loans will cause undue hardship for you, they may be discharged as well. For example, you may have to show some permanent disability that prevents you from getting a job and living a normal financial life. If you are capable of proving such aspects, the court may order to discharge the student loans.
Debts Owed To The Court
If you owe some court fees, such debts are also not dischargeable while you are filing bankruptcy under chapter 7. Likewise, because of any criminal activity, if you owe a certain amount to the victim or the court, such amounts are also not dischargeable. Any kind of Court imposed restitution cannot be discharged. In all cases, all such debts come under the title of non-dischargeable.
Debts Associated With A Divorce Or Marital Case
If you owe a certain amount associated with a divorce or marital decree by the court, such debts also cannot be discharged under chapter 7 of the bankruptcy code. Some people have the misunderstanding that these amounts can be discharged if the ex-spouse does not have any objection, which is not true. Even if the ex-spouse does not object, these amounts come under non-dischargeable debts while you are filing bankruptcy for straight liquidation. Therefore, while you are planning to file your petition, you must keep in mind that you will not be able to discharge the debts associated with a divorce or marital case.
Certain Kind Of Taxes
All kinds of taxes except the following are non-dischargeable as per the new bankruptcy laws. Even if you are declared as bankrupt, you will still be liable to pay these taxes.
Taxes measured by gross receipts or income taxes
If the taxes are accurate and no omissions or errors in the return are found in the IRS
If the taxes are older than three tax years
What is more, if you owe an amount associated with Alimony and child support, these are also non-dischargeable while you are filing bankruptcy for complete liquidation.
Filing bankruptcy under chapter 7 of the bankruptcy court may discharge most of your debts, but not all. As per the new bankruptcy laws of the bankruptcy code, there are certain kinds of debts that cannot be discharged in any case. Such debts may include student loans, debts owed to the court, debts associated with a divorce or marital case etc.
Article Source: http://EzineArticles.com/?expert=Saurabh_K_Jain

How Do I Improve My Credit Score After Bankruptcy?

There are, In essence, two ways a person can file for bankruptcy and those two ways consist of getting rid of all the debt completely or paying some of it back. Chapter 7 bankruptcy is where nothing is repaid and Chapter 13 is where some is repaid. Either way a person looks at it, bankruptcy will impact a credit score quite negatively. These impacts will in most cases last on a credit report for 10 years. But how does a person who has a bankruptcy on their credit report help improve it? This is what we will discuss here.
First, no matter how you look at it; it will be extremely difficult to obtain any financing following a bankruptcy right after it occurs. But that does not mean a person cannot begin building their credit back up while the effects of a bankruptcy are in full effect on a credit report. One major way a credit score can be improved is through secured lines of credit.
Secured lines of credit are simply where the creditor will allow a credit account to be active, even after bankruptcy, provided that the maximum credit amount is backed up 100% by your own funds. So if you want a $5,000 credit line, you will have to deposit $5,000. This is simply to eliminate the risk to the lender that any more default of delinquent payments will occur. This is a great opportunity for those who need to build their credit back up while providing that creditor a lower amount of risk. Over time this will help improve a credit score substantially after many payments on the accounts have been made.
After a couple years, many of those who had filed for bankruptcy will be eligible to apply for another loan such as a mortgage. If that person has been working on improving their credit score over the years, then that improvement will surely show on their report which will help their chances substantially. There are no guarantees, however, especially after a situation such as bankruptcy, but it does show that the person is making a good, honest effort to improve.
Granted, in this type of situation such as bankruptcy, there will always be repercussions to that negative impact on your credit score as it will usually result in higher down payments and such. The ramifications of a bankruptcy are really never actually eliminated completely from a person's record so it is very important to reconsider one's options if they are considering declaring bankruptcy, especially if they are planning to declare a Chapter 7 bankruptcy where they decide not to pay ANYTHING back at all.
Overall, the best way to improve one's chances of having a much harder time in the financial world is to work on preventing the situation all together. One way that many keep their credit in line is through monthly monitoring of their credit through services offered by Experian and other credit monitoring companies which can be seen in more detailed at our website. If a person monitors their credit often and prevents decisions which could compromise their credit in the future such as with mortgages higher than they can afford, the rewards will be much greater when the time comes when such items become necessities. There are many other ways a person can help avoid the problems associated with a bankruptcy before it happens through services such as debt settlement or even making an appointment with a legit credit consolidation professional whose job it is to help you get out of any financial jams that you may currently be in. If it has already been established, then just focus on making payments and improving that score over time.
S. Michael Windsor is currently publisher and a writer for myCreditScoreNetwork.com. The MCN Online FICO Credit Score Guide is a premier FICO score and credit report information platform that provides individuals with a quality in-depth look at credit scores and reports and the associated products, services and information available today. Visit us today at http://www.myCreditScoreNetwork.com and subscribe to our FREE Member services.
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