Tax Debt
The majority of tax debt is non-dischargeable. The only exception is if your debt meets the following conditions:
- The taxes must have been due at least three years ago.
- The tax return must have been filed at least two years ago.
- No tax assessment has occurred in the last 240 days.
Your tax debt is dischargeable only if it meets all three of these criteria. If you have dischargeable tax debt and are currently making payments on it, it is important that you continue these payments until you file bankruptcy. Otherwise, the government can place a lien against you.
Student Loans
Bankruptcy cannot discharge student loans. Congress has made this determination based on public policy considerations. A creditor cannot take a college degree as they can a home or car. If student loans were dischargeable, what would stop students from paying for their college education via loans and then simply file bankruptcy after earning their diploma? Few lenders would offer student loans were this the case.
Child Support and Alimony
Child support and alimony are non-dischargeable in the vast majority of cases. There are only two exceptions to this general rule:
- If the court has mistakenly specified an obligation as “alimony,” which is not actually alimony. For example, if the court orders a former spouse to pay off marital debt as alimony, this can be discharged because it is not actually alimony.
- Alimony debt can also be discharged if it has been assigned to a third party.
Fines for Breaking the Law
If you break it, you buy it. This is quip is true of the law in the context of bankruptcy. Bankruptcy cannot discharge parking tickets, fines, DUI penalties, and other financial penalties incurred from breaking the law.
For more answers to your tax debt questions, call our Fairfield bankruptcy office today!