Are There Debts That Bankruptcy Will NOT Eliminate?

While bankruptcy may help give you a fresh start, stop foreclosure on a house or mobile home and prevent repossession of your vehicle (or even force the return of a repossessed vehicle), there are certain items that will not be eliminated by bankruptcy that are important to know:

  • Federal, state and local taxes that are owed
  • Debts incurred to pay taxes owed
  • Debts for alimony and child support and some property settlements
  • Fines and penalties owed to governmental agencies
  • Some student and education loans
  • Fines/penalties incurred while driving while intoxicated
  • Most criminal restitution debts
  • Certain debts incurred 70 days prior to filing for bankruptcy
  • Court ordered restitution debts

A Utah bankruptcy attorney can provide you with a complete list of debts that cannot be discharged (forgiven) in a bankruptcy as well as help guide you through many of the important requirements to consider before making a decision to file for bankruptcy.

REPERCUSSIONS AND RESULTS OF FILING FOR BANKRUPTCY

While the stigma attached to bankruptcy has lessened over the years, there are consequences nevertheless.  The most serious of these is future access to credit.  Bankruptcy is public record and will be recorded on one’s credit report as well.  A Chapter 7 bankruptcy will stay on a credit report for 10 years and a Chapter 13 bankruptcy will stay on a credit report for 7 years, lowering your credit score and access to future credit until it drops off the credit report 7-10 years down the line.

Future lenders will see this every time you apply for credit, and this may cause them to reject your credit application, whether it is for large or small loans or credit card applications.  If you are indeed granted access to credit, you will probably be charged a high rate of interest, costing you more the item purchased.

While a bankruptcy does indeed show on a credit report, it may not be any worse than the damage already done by late payments and delinquent accounts already existing on a credit report.  Seeking a qualified Utah attorney can help guide one through options to find the best way to proceed through financial distress.