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Identifying the Type of Debts that Can Be Legally Resolved with Bankruptcy

Bankruptcy is designed to relieve people of debts that they cannot afford to pay. However, there are certain debts it will not eliminate. Before you file for a Chapter 7 or 13 bankruptcy, you need to learn what debts can be included with your case.

An experienced bankruptcy attorney in Pasco County can help you determine which of your debts will be resolved in bankruptcy.

Student Loan Debt

Your bankruptcy attorney in Pasco County will inform you that you cannot get rid of most student loan debt through a Chapter 7 or 13 bankruptcy. Student loans can generally only be forgiven if you are disabled or homeless for an extended period of time. They also can rarely be forgiven if paying them back would cause you extreme financial hardship.

When you file for bankruptcy, the student loan agency must cease all collection activities against you. However, after your case is discharged, you will then have to work out a new payment arrangement with the student loan holder and resume paying on your loans. Despite bankruptcy not discharging student loan debt, it can free up money to put toward payments.

Back Taxes

Bankruptcy also cannot forgive outstanding federal or state taxes. Like student loan creditors, the IRS and state treasurer cannot collect on their debts while your bankruptcy case is still pending. After it is discharged, they can resume collecting what you owe to them.

You can find out more about filing for bankruptcy and what kinds of debts can be forgiven in it online. Contact a bankruptcy attorney in Pasco County to set up a free consultation before filing.

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