Despite the fact that you are declaring bankruptcy, you may be surprised to find out that certain debts are exempt from this process. What this means is that no matter what the outcome of a bankruptcy hearing, you will still have to service or pay these debts regardless. This article will give you some common examples of debts that are exempt and advise how you should proceed if you are contemplating bankruptcy.
One area of contention that always crops up is the issue of child support or maintenance payments. If a court has ordered you to pay anything towards these awards then any existing debt is considered exempt of bankruptcy proceedings. Once again, this means you will have to find this money and won't be protected by the court. This applies for all the law chapters, including ch 7 and ch 13. Often people will see bankruptcy as a way to get out of their responsibilities in terms of these payments. They will have to pay the support in full.
IRS liens are another common debt that is not protected against in the courts. This occurs when you have to pay back taxes to the IRS but can't afford to, so they put a lien on your house or take it out of your wages on a monthly basis. Sadly this sum of money can be quite large as it may stretch back many years and is not exempt from bankruptcy.
Whilst covering the government, it should also be noted that any government loans are generally considered to be exempt from bankruptcy. Remember that this applies to student loans that are covered by the government too and are a common form of finance for young people.
Finally, any court orders where you are ordered to pay an individual a specified sum of money are also considered to be exempt from bankruptcy.
These are some of the reasons why you should understand the full consequences of filing for bankruptcy. For instance, you may have a number of debts that can never be cleared by the courts. After all you don't want to have a low credit rating, the stigma of filing for bankruptcy and still owe a huge amount of money to people.
Before going down this route you should conduct a thorough audit of your finances. You should qualify all your outgoings and your current monthly income. If any of the outgoings are any of the above them you may want to reconsider filing for bankruptcy.
Additionally, you should find out if there are any outstanding judgments awarded by courts against you. You will be aware of this (even if you have chosen to forget it) as the law requires you to be notified if any litigation process is begun against you. To clarify, you can't be protected by the bankruptcy law against these types of debts.
One area of contention that always crops up is the issue of child support or maintenance payments. If a court has ordered you to pay anything towards these awards then any existing debt is considered exempt of bankruptcy proceedings. Once again, this means you will have to find this money and won't be protected by the court. This applies for all the law chapters, including ch 7 and ch 13. Often people will see bankruptcy as a way to get out of their responsibilities in terms of these payments. They will have to pay the support in full.
IRS liens are another common debt that is not protected against in the courts. This occurs when you have to pay back taxes to the IRS but can't afford to, so they put a lien on your house or take it out of your wages on a monthly basis. Sadly this sum of money can be quite large as it may stretch back many years and is not exempt from bankruptcy.
Whilst covering the government, it should also be noted that any government loans are generally considered to be exempt from bankruptcy. Remember that this applies to student loans that are covered by the government too and are a common form of finance for young people.
Finally, any court orders where you are ordered to pay an individual a specified sum of money are also considered to be exempt from bankruptcy.
These are some of the reasons why you should understand the full consequences of filing for bankruptcy. For instance, you may have a number of debts that can never be cleared by the courts. After all you don't want to have a low credit rating, the stigma of filing for bankruptcy and still owe a huge amount of money to people.
Before going down this route you should conduct a thorough audit of your finances. You should qualify all your outgoings and your current monthly income. If any of the outgoings are any of the above them you may want to reconsider filing for bankruptcy.
Additionally, you should find out if there are any outstanding judgments awarded by courts against you. You will be aware of this (even if you have chosen to forget it) as the law requires you to be notified if any litigation process is begun against you. To clarify, you can't be protected by the bankruptcy law against these types of debts.
About the Author:
Understand the implications of bankruptcy, especially exempt assets for bankruptcy and debt exempt from bankruptcy . Adrian writes on ways to deal with debt. Get a totally unique version of this article from our article submission service
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