Which Debts Are Wiped Out in a Bankruptcy

10. I owe $25,000 in back property taxes. If I file for bankruptcy can I wipe out my back property taxes and still keep my home?

No, property taxes aren’t dischargeable unless they became due more than a year before you file for bankruptcy. Even if your personal liability to pay the property tax is discharged, however, the tax lien on your property will remain. From a practical standpoint, this discharge won’t help you much, because you will still have to payoff the lien before you can transfer the property with clear title. Moreover, you may even face a tax-foreclosure action by your township if you take too long to pay your back property taxes. A local township will file a tax foreclosure case if you have two years worth of back unpaid property taxes.

11. What other type of taxes are not dischargeable?

The other types of taxes that are not dischargeable are mostly business related: payroll taxes, excise taxes, and customs duties, sales, use, and poll taxes are also probably not dischargeable.

12. I was recently convicted for a DWI charge. Moreover, I was also involved in an accident with another vehicle and I was sued for $50,000. Can I file for bankruptcy and wipe out these debts as well?

If you kill or injure someone while you are driving and are illegally intoxicated by alcohol  drugs, any debts resulting from the incident aren’t dischargeable. Even if  judge or jury finds you liable but doesn’t specifically find that you were intoxicated, the debt may still be non-dischargeable. The judgment against you won’t be discharged if the bankruptcy court determines that you were, n fact, intoxicated. Note that this rule applies only to personal injuries: Debts for property damage resulting from your intoxicated driving are dischargeable.

13. I now owe $10,000 in back condo dues. Can I file for bankruptcy and wipe out these back condo dues?

Maybe, you can’t discharge condo fees that were assessed after your bankruptcy filing date. As a practical matter, this means that any condo dues that become due after you file for chapter 7 will survive the bankruptcy. However, any condo dues that you owed prior to filing will be discharged.

14. Can I file for  a bankruptcy and discharge my loans from a retirement plan?

No, if you’ve borrowed from your 401(k) or other retirement plan that is qualified under IRS rules for tax deferred status, then you will be stuck with that debt.

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