Which Debts Survive a Bankruptcy Filing?

Although bankruptcy is a powerful tool for debtors, it does not wipe out all kinds of debt. Before you file for bankruptcy, make sure to do some research and figure out which debts can and cannot be wiped out. Some of the things filing a bankruptcy can do is get rid of all credit card debt and other unsecured debts, stop creditors from harassing you, and eliminate certain kinds of liens. However, the important information is what does not happen when you file for bankruptcy. Some of the most common debts that cannot be eliminated are:

1. Student Loans – These are loans that are taken out for schooling purposes. Whether it is federal student loans, loans directly from the school, or tuition assistance, these debts are exempt from elimination in bankruptcy. However, the exception to this is if you show that paying this loan will cause an exceeding amount of hardship. For example, you must show that not only will you be able to pay the loan now nor in the future at any point.

2. Secured debt – This is a debt where the creditor has a claim on your property or purchase and can take it back if you do not pay the debt. For example, if you purchase a vehicle or expensive piece of jewelry and then file bankruptcy, you are either going to have to give up the item or continue to pay the lender. This is because at the time of purchase, you agreed to pay for the item in exchange for the current use of the item. You cannot just keep the item but not pay for it.

3. Child support and alimony – Any money in the form of child support and alimony you owe to your ex-spouse or child cannot be eliminated by bankruptcy. Any remaining balance that was there at the time of the filing will remain and will need to be paid.

These are only a few of the many debts that cannot survive bankruptcy. In addition, even if a debt is said to be eliminated but your creditor convinces the judge otherwise, you will still be obligated to pay it. These include debts that are acquired through fraud, such as lying on a credit application. This is why it is so important to stay on top of everything and be informed so you know what exactly to do before getting stuck in a sticky situation.

Archana Sabesan

Archana Sabesan

Archana Sabesan is a junior at North Carolina State University. She is currently pursuing a major in Psychology, with a primary focus in Child Psychology, and a minor in Spanish. After graduating, she plans to attend graduate school to obtain her PsyD degree in Clinical Psychology. Her experiences at Stanford University and Duke University as an Undergraduate Research Assistant have helped her to develop an effective research regiment and build on her observation skills. She hopes to open a private practice of her own in the future.

Every summer, Archana works at Kumon, a math and reading workshop, tutoring children between the ages of three and 18 in these subjects. She used to be enrolled in this program herself, so this allows her to connect with the students and give them the one-on-one help that they need. Archana is also currently a member of NC State’s Psychology Club, Rotaract Club, and EKTAA (NC State’s premiere South Asian Student Organization).

Archana was born in India, and moved to North Carolina with her immediate family when she was 7 years old. She speaks mostly Tamil, the native language of South India, and English in her home. In addition, having taken Spanish classes since 6th grade, she can speak and understand it pretty well too. Archana enjoys spending time with her family and friends, watching movies, listening to music, and going to the gym. She also loves to travel, and hopes to travel the world one day and learn about all the different cultures!
Archana Sabesan