Many people are under the impression that a bankruptcy means that all of their debts will be discharged, and they will start over again with a clean slate. However, this is a false impression. The type of personal bankruptcy that comes closest to the idea of a having your debt wiped away is called a Chapter 7 bankruptcy, and there are several debts that are not covered. The following are three of these debts.

Student Loans

If you are one of the many people with a student loan, bankruptcy will not help bring relief. It is true that there are exceptions granted by a judge based upon undue hardship, but they are rare. You need to demonstrate that a good faith effort has been attempted to pay back the debt, and your income needs to be at or near poverty levels, so it is difficult to survive financially while servicing your student debt. There is a subjective interpretation as to what circumstances qualify an individual for undue hardship, so it will depend upon the particular judge that hears your case. It is best to consult with a bankruptcy attorney about your finances, and how it would apply to a chapter 7 bankruptcy. For most people, the best solution will be found with options involving refinancing.

Taxes Will Not Be Discharged

With rare exception, you will have to pay your taxes regardless of your financial situation. This includes a full range of taxes that include both property and income taxes. However, the good news is that you may be able to reorganize your tax debt with a payment plan under a Chapter 13 bankruptcy. If you need help with tax debt, then speak to an attorney. There is help available.  

Recent Debts May Not Be Discharged

Many people think that they can run up debts right before a bankruptcy filing, but the law is written to protect creditors in this situation. If there are recent debts that have accumulated on a credit card and a bankruptcy judge believes that it was done intentionally, a judge may exclude these recent debts from being discharged. People who think they can get by with this type of irresponsible use of credit will be seen by a bankruptcy court as abusing the bankruptcy laws, and they will be held accountable. If you have gotten to the point where you think you may need to file for bankruptcy, put your credit cards away and consult with a personal bankruptcy attorney.  

Although a Chapter 7 bankruptcy may seem simple, it can become complicated quickly. You should always consult with an attorney (such as Richard S. Ross - Bankruptcy Attorney) for assistance and advice.