Frequently Asked Bankruptcy Questions

By Mildred N. Phillips

When you are overwhelmed with your debts, bankruptcy may be the only option to get you out of the debts. You should not be ashamed to seek this relief from your debts. Bankruptcy is a right given to you by a federal law to erase your debts to get a fresh start.

Question 1: Can I discharge my student loans in bankruptcy?

Yes, you can. While student loans are generally dischargeable in bankruptcy, the reality is that it is very difficult to do so. In order for student loans to be discharged, the debtor must file separate complaint within the bankruptcy case—a Complaint in an Adversary Proceeding to determine the dischargeability of the student loans. In an Adversary Proceeding, the debtor must show that due to extreme hardship that he or she is no longer able to pay her student loans. If the Court rules in her favor, the student loans would be discharged as part of her bankruptcy case. Otherwise, the loans would not be discharged and thus the debtor would continue to be responsible for the loans after filing for bankruptcy protection. See 11 U.S.C. Section 523(a)(8).

Question 2: Can I discharge my taxes in bankruptcy?

Yes, if the taxes meet certain requirements. Generally, taxes are not dischargeable in bankruptcy. See 11 U.S.C. Sections 523(a)(1) and 1328(a)(2). However, in certain situations, taxes can be dischargeable. Generally, the taxes are dischargeable if all of the following conditions are met:
(1) The tax return was not fraudulent and filed on time or, if the return was filed late, it was filed more than two years before the bankruptcy;(2) The tax is not a priority claim; and (3) The debtor did not willfully evade taxes. A tax debt is a priority claim if the tax return was filed less than three years before the date of the bankruptcy petition. A tax debt also is a priority debt if it was assessed within 240 days before the bankruptcy petition, or is assessable after the commencement of the case.

Question 3: Can I file for bankruptcy protection to discharge fines and penalties owed to a governmental unit?

No, you cannot. These fines and penalties are not dischargeable in bankruptcy pursuant to 11 U.S.C. Section 523(a)(7).

Question 4: Am I still responsible for my Condo and HOA fees after bankruptcy filing if my name is still on the property but I have already moved out?

Yes. While you are not responsible for past due fees up to the date of the bankruptcy filing, you are responsible for future fees if the property has not been foreclosed and your name is still on the property.

Question 5: Can I file for bankruptcy protection at the same time that I am filing for divorce?

You can, but it is strongly not suggested. You should do one or the other and let that process complete, then file the other one. Filing both together would complicate matters in both bankruptcy and divorce proceedings. While the filing of bankruptcy case would not stop the proceeding in your divorce case in general, it would stop the divorce Court from making any decision regarding property division until the bankruptcy case is concluded or until the parties have obtained the permission of the bankruptcy Court to proceed with the property division. This is because at the commencement of the bankruptcy case, the bankrupt y estate is created. This estate is comprised of all the interests of the debtor and debtor’s spouse in the same properties that are now subject to division in the divorce case.

Question 6: If I am married, can I file by myself without including my spouse?

Yes, you can, but you must still include your spouse’s income and expenses on your bankruptcy case.

Question 7: Will I lose my car if I file for bankruptcy protection, if I am current on my car payments?

No, so long as you are current on your car payments, you would not lose your car.

Question 8: Will I lose my house if I file for bankruptcy protection, if I am current on my loan payments?

No, you will not lose your home if you are current on your payments.

Question 9: Can I file bankruptcy to discharge my child support and alimony obligations?

No, you cannot. Child support and alimony payments are considered Domestic Support Obligations and are not dischargeable in bankruptcy pursuant to 11 U.S.C. Section 523(a)(5).

Question 10: Can bankruptcy wipe out all my debts?

No. Bankruptcy can wipe out most debts, but some debts are not dischargeable in bankruptcy such as child support, alimony, some taxes, fines and penalties, debts incurred through DUI, etc. Consult a local bankruptcy Attorney for more information.

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