If you declare bankruptcy, you are legally allowed to restructure your debt to reduce it. If you can reduce your debts significantly after declaring bankruptcy, this may improve your financial situation. However, there are debts you will not be able to erase, which are called non-bankruptcyable debts. Here are some debts that you still need to pay even after declaring bankruptcy.
1. Student Loan Debt
If you have any student loan debt, you will still be responsible for paying this after filing for bankruptcy. This student loan includes any federal and private student loans. Even if you have been declared bankrupt, your student loan debt will not be decreased or erased like your credit card debts. This is because it is a federally guaranteed program and requires people to pay back their loans even if they declare bankruptcy to reduce their debts.
2. Credit Card Debts
If you are a responsible borrower, then there is no doubt that you have credit card debt. At first, you may find yourself frustrated because you could not pay off your credit card debt before filing bankruptcy, and now you might feel like it is a losing battle. However, if you declare bankruptcy, it will be tough for your creditors to collect their money from you. Some creditors will try to collect as much money as they can from customers declared bankrupt. They may even sue you and your family in an attempt to collect the debt. However, if you have a good lawyer, these creditors may find it difficult to collect money from you.
3. Court Fines
If you have been in court for any reason, then there is a chance that you owe money to the court. If you were found guilty of a crime or were being sued by someone else, you may be required to pay fines as part of your punishment. You may also be required to pay other court fees related to your case. Even if you declare bankruptcy, these debts will not be erased or reduced like other debts, and there will legally be a part of your debt that you are responsible for paying.
4. Secured Debts
A secured debt is when a creditor holds a lien on your property to be able to claim that money as collateral against your debt. If you declare bankruptcy, this lien will be lost or will not be enforced, and you can sell your property and use the money from that sale to erase or reduce other debts. If a creditor has a lien on your home or property, they can claim this asset and sell it to pay off your debt.
5. Alimony or Child Support
If you have been ordered by a court to pay alimony or child support, this order will remain in place even after declaring bankruptcy. This is because both parties signed a legally binding contract. They are legally obligated to uphold their end of the agreement for as long as it lasts. Even if you have filed for bankruptcy in the past, these debts will not be diminished or erased, and you will still have to pay these fees until the last day of your life if you need to.
6. Debts Obtained by Committing a Fraud
If you have legally committed fraud and obtained money or goods that you are not entitled to, then there is a good chance that you will still be responsible for paying this money back as long as you live. This includes if the creditor can trace your name and find out who has that credit card or account in their name. When you declare bankruptcy, the creditor will be able to recover money that they might have paid to you if they had known that you used deception.
7. Debts Obtained Through Officially Banned Means
If a creditor uses a banned method or deception to obtain money from you, they will take this legal action against the person who did so, and your creditors can sue them. These creditors may take their claim to court, and once proven, these debts can be erased. These debts will not be reduced or eliminated if you declare bankruptcy.
It is a good idea if you want to declare bankruptcy to get out of debt and begin a fresh new life. However, it would be best if you understood the debts that you can’t get rid of might make your life more difficult. If you are going through financial hardship now, it would be wise to discuss your options with an experienced bankruptcy attorney.