Taxes and Student Loans in Bankruptcy

Taxes and Student Loans in Bankruptcy

Taxes and Student Loans in Bankruptcy

There are certain kinds of debt that can be discharged in bankruptcy.

A Chapter 7 bankruptcy is a great way to reduce or eliminate many debts.  A Chapter 7 bankruptcy can help discharge credit card debts, medical debts and many other types of unsecured debt.  A Chapter 7 bankruptcy may allow you to reduce or eliminate credit card debts or other unsecured debts, thereby enabling you to focus your debt repayment efforts on tax liabilities and student loans.

Taxes and Student Loans – Dealing With Non-dischargeable Debts in Bankruptcy

Some debts are difficult or impossible to discharge through bankruptcy.  Debts that are difficult or impossible to discharge include:

  • Student loans
  • Child support arrears
  • Certain types of taxes owed to the government

Not all unsecured debts can be eliminated in bankruptcy.  While exceptions to discharge cover debts range from child support to back taxes, rules differ depending on factors like the nature of the debt, the age of the debt, or your ability to present a hardship case.

Non-dischargeable debts come in many forms.  Some are by definition non-dischargeable, while others are subject to discharge unless the creditor files a specific objection.  Examples of non-dischargeable debts include the following:

  • Lawsuit damages related to drunk driving, willful or malicious conduct, or fraud
  • Child support or alimony
  • Taxes that are less than three years old or for which no return has been filed
  • Most student loan obligations
  • Certain credit card debts incurred under circumstances indicating an intent to defraud the issuer

Certain types of state and federal taxes, as well as student loans, fall into the category of debts that are generally not dischargeable.  However, some types of tax obligations can be discharged.  Talking to a lawyer can help you to determine which type you have.

There are also debt relief services available to people suffering from an unmanageable tax debt or student loan debt.  For example, a Chapter 13 bankruptcy may allow you to pay back other debts over a longer period of time and therefore increase your ability to handle your current tax or student loan debt load.

Many old tax debts can be discharged in bankruptcy

Many people will tell you that tax obligations are non-dischargeable debts.  This is only true of taxes that have been assessed and payable for less than three years.

If you owe taxes for which you’ve filed the returns more than three years ago, or that have been in collection for at least that long, you can discharge them in bankruptcy like other unsecured claims unless enforceable tax liens are in place against property with enough value to meet them.

Student Loan obligations in bankruptcy

It used to be that a hardship argument could convince a bankruptcy court to excuse you from repayment of student loans.

Today, recent amendments to the Bankruptcy Code have made it more difficult to prove hardship as a basis of discharge.  In order to prove hardship, it is now necessary to demonstrate that your education has little or no value in helping you generate income for reasons beyond your control.  It is also important to note that if you have been excused from your student loans there are many jobs that you will be unable to apply for because you have been excused from repayment of student loans.

Find Out if You Qualify

 

Is Bankruptcy Right for You?

If you are facing financial challenges and considering bankruptcy in Bellevue, Seattle, or Washington State, watch the following video which has Bellevue Bankruptcy Attorney Jonathan Smith discussing bankruptcy in Seattle, Bellevue, and Washington State, specifically Chapter 7 Bankruptcy on King 5 New Day Show.

The first thing you should do if you are facing bankruptcy in Bellevue or Seattle in King County is contact bankruptcy attorney Jonathan Smith at Advantage Legal Group. We will take a look at your specific financial situation and discuss the best option for you. Jonathans has been practicing law in Bellevue and Seattle Washington for over 23 years. We’ve seen it all. The ups and downs. The 2008 financial crisis and economic downturn. We’ve been practicing Foreclosure Defense Law and are a Northwest leader in mortgage mediation and mortgage modification.

Give us a call if you are considering bankruptcy in Washington State so you can make an informed decision. Advantage Legal Group is a debt relief agency helping Bellevue and Seattle residents with bankruptcy, foreclosure defense, mortgage mediation, and mortgage modification for 23 years in the Northwest.

If you are facing foreclosure on your Bellevue or Seattle area home in Washington State, bankruptcy may or may not be the best option. As an experienced Foreclosure Defense Law Firm in Bellevue, Seattle, and Federal Way, WA.  Advantage Legal Group will ask you specific questions related to your unique financial situation. If you are behind on your mortgage payments or maybe you did a mortgage forbearance with your mortgage lender because of Covid-19 and you can’t make up the payments to get current. There are many circumstances where the better option for you may be mortgage mediation or mortgage modification.

Give us a call at 425-45209797 so we can help you make an informed decision on whether Chapter 7 Bankruptcy is the right decision for you.

Bellevue Bankruptcy Attorney Bellevue Washington Lawyer
Bellevue Bankruptcy Attorney Bellevue Washington Lawyer