Bankruptcy, a popular debt solution, allows you to pay most debts and make a fresh financial start. But, there are a few kinds of debts that aren’t dischargeable. This means you can’t get rid of a few kinds of debts in bankruptcy. If you’re planning to file bankruptcy (especially without getting any help from an attorney), then it’s important to know about the debts that aren’t dischargeable. Otherwise, you might apply for bankruptcy unnecessarily and end up wasting time and money.

Debts That Can’t Be Discharged

1. A car you bought recently

Have you purchased a car or an expensive piece of jewelry before filing bankruptcy? If so, then you have two options. The first option is to continue making payments to the lender. The second option is to give up the item. Remember, you have signed an agreement. You have promised to make payments for using the item. If you fail to do so, then the lender can snatch away the item from you.

What else you can do

You can surrender the car or the expensive jewelry to the lender. This way you won’t have any liability to make payments to the lender. The lender has given you the item. He/she has a security interest. You can’t keep using the car without paying a penny to the lender.

2. Income tax

Most people think about bankruptcy to discharge unpaid income tax. It isn’t impossible to discharge income tax in bankruptcy. But there is a strict eligibility criterion, which you need to fulfill.

Read more on… 6 Types Of Debts You Can’t Kick Out In Bankruptcy

Author:  Stacy Barbee