Tuesday, October 20, 2009

How different debts are treated in Bankruptcy

Debts Dischargeable in Chapter 7

• Personal loans -- such as money borrowed from friends
• Credit cards
• Repossession deficiencies
• Auto accident claims
• Health care bills
• Judgments
• Debts from a Business
• Leases
• Guaranties
• Negligence claims
• Tax penalties over 3 years old
• Non priority taxes

Possibly Dischargeable in Chapter 7

• Willful and malicious injuries to others
• Embezzlement
• Fraud or dishonesty
• Debts arising from breach of fiduciary duty

Need Chapter 13 for:

• Luxury purchases on credit within 90 days of filing
• Cash advances of over $750 within 70 days of the filing date
• Debts for loans taken out against retirement accounts
• Trust fund taxes
• Child or spousal support
• Fines, penalties, restitution
• Accident suits involving intoxication
• Debts not listed -- see below
• Penalties payable to the government other than tax penalties
• Student loans
• Debts in prior bankruptcy and debtor was denied a discharge
• Taxes for years where return was unfiled or filed for less than 2 years
• Taxes for which no return has been filed
• Taxes first due within three years of the bankruptcy
• Taxes assessed within 240 days (8 months) of the bankruptcy filing. “Assessed” means you did not file a return, so the IRS computed how much they think you owe.

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