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Will Bankruptcy Remove All of My Debts?

Will bankruptcy remove all my debtsBankruptcy is a powerful tool that can really help a person get back on their feet. One of the main policies for bankruptcy relief is to give individuals and businesses a fresh start. It would not be much of a fresh start if you were not able to remove your debts. Most all of your debts can be removed through the bankruptcy process. Everything from credit cards, medical bills, loans, payday loans, lawsuits and even toll fines can be removed. There are a few types of debt that typically cannot be removed in the bankruptcy process.

• Some IRS Debt. There are several factors to determine whether you can remove your IRS debt in bankruptcy. One of those factors depends on how old the debt is, however, this is not a simple analysis and should be done by an attorney. If you do consult an attorney you will need to provide him or her some information before they can make a determination as to whether your IRS debt can be removed through bankruptcy. The information you will need is listed below. (This information can typically be found by requesting your tax return transcripts directly from the IRS and doing a records search in your county’s real property records).

• How old is the debt?

• Is there an active lien?

• Did you file the tax returns timely for those years for which you owe?

• What type of debt do you owe the IRS? Income Tax, Payroll Tax, etc.?

• Student Loan Debt. The bankruptcy code will only remove student loan debt if you can establish an “undue hardship”. The problem is that the courts have interpreted this undue hardship standard in favor of student loan holders. In essence, if you are not disabled then the student loan debt will not be discharged. You may have circumstances that warrant consideration; however, this is something you need to talk to your attorney about. If you can work, you will not get your student loan debts discharged. The types of situations that I have seen whether a person was able to have their student loan debt discharged is when they have suffered some medical illness or disability that is preventing them from working.

• Child Support. This is never dischargeable.

• Some State Taxes.

Most attorneys offer free consultations so take advantage and talk to an attorney about your situation to see if bankruptcy is right for you.