Which Debts Are Wiped Out in a Bankruptcy

7. Are the other types of martial debt(s) that I may owe to my spouse dischargeable?

Under the old bankruptcy law, any debts owed to a spouse or child, other than support that arose from a divorce, were discharged unless the spouse or child appeared in court to contest the debt. Under the new bankruptcy law, this category of debt is now automatically non-dischargeable. The most common of these types of debts is when one spouse agrees to assume responsibility for marital debt or promises to pay the other spouse in exchange for his or her share of the family home. These types of obligations will now be non-dischargeable if they are owed to a spouse, former spouse, or child, and arose out of “a divorce or separation or in connection with a separation agreement, divorce decree, or other order of a court of record, or a determination made in accordance with State or territorial law by a governmental unit.”

This rule doesn’t apply to debts arising from a separation agreement between domestic partners. This is one example of many as to why civil unions do not provide the same benefits as marriage.

8. Are court fines, penalties or restitution dischargeable?

You can’t discharge fines, penalties, or restitution that a federal, state, or local government has imposed to punish you for violating a law. Some examples include:

  • fines or penalties imposed under federal election law
  • charge imposed for time spent in a court jail
  • fines for infractions, misdemeanor or felonies
  • fines imposed by a judge for contempt of court
  • fines imposed by a government agency for violating agency regulations
  • surcharges imposed by a court or agency for enforcement of a law
  • restitution you are ordered to pay to victims in federal criminal cases, and
  • debts owed to a bail bond company as a result of bond forfeiture.

9. I was convicted of tax fraud. I now owe owe the IRS $50,000. If I file for bankruptcy can I wipe out these back income taxes?

No, you cannot discharge debts for income taxes if you didn’t file a return or you were  intentionally avoiding your tax obligations. Any tax returns filed on your behalf by the IRS are not considered returns and therefore don’t make you eligible for a discharge of

income tax debt.

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