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Article By: AdrianFletcher
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What Debts Are Exempt From Bankruptcy
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 controversial area of debt exemption is that dealing with child or maintenance support. If you are paying or have been ordered to pay these moneys by a court then they are generally considered to be exempt from bankruptcy. Again, this means that you will have to find money to pay these regardless of if you have successfully filed for bankruptcy. This includes all the law chapters, including Chapter 7 and Chapter 13. Sometimes people will file as they see this as a way to avoid their responsibilities but this will not help them. Rather they will have to come up with all the outstanding money.
Another common debt that is exempt is known as IRS liens. First a little background, if you have been audited by the IRS at some point and found to owe them money they can enforce a lien on your house or garnish your wages. Depending on the amount you owe the government, this amount can add up to a large amount of money that is, unfortunately, exempt from bankruptcy.
Since I have mentioned the government, it is important to understand that any government loan is exempt form bankruptcy. This includes things like student loans that were financed by the government.
On a final note, court orders that require you to pay an individual or creditor a specific amount of money that were handed down before the bankruptcy proceeding began are also exempt from bankruptcy.
This is why you should get informed about the limitations of the bankruptcy laws and your obligations should you proceed. It is incumbent on you to understand what debts the courts can help you with and those that they can't help you with. After all, there is a certain embarrassment about filing for bankruptcy, that includes losing your credit rating - you don't want to have all the debt too.
So it is vitally important that you get a good audit of your personal finances before you think about bankruptcy. You have to calculate your monthly income and work out all the outgoings and long standing debt. Simply put, if any of your monthly outgoings or long term debt are any of the types mentioned above then you should reflect on filing for bankruptcy.
Another thing is to determine if there are any court judgments held on your name. This should be known as it is part of the law to notify the defendant in any litigation proceedings. Again you are not protected against these should you file for bankruptcy.
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About the Author
Do you know the implications of bankruptcy, especially exempt assets for bankruptcy and debt exempt from bankruptcy . Adrian writes on ways to deal with debt.
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