Many Americans struggle with debt, and Michigan residents are no exception. Chapter 7 and Chapter 13 bankruptcies are options that may alleviate some of your financial stress. Regardless of which type of bankruptcy you choose, neither Chapter 7 nor Chapter 13 bankruptcy will eliminate certain debts, however.
Depending on your work situation during a typical year, you might be one of many people who owe the IRS money. Regardless of what you owe the IRS, filing for bankruptcy will not absolve some tax-related debts. If the tax debts involve returns due a minimum of three years before your bankruptcy case begins, those may be excluded. However, it’s not possible to eliminate tax liens or property taxes through either Chapter 7 or Chapter 13 bankruptcy.
Spousal or child support
After a divorce, some people may pay alimony each month. There’s also child support, which typically goes to a former spouse for child-related expenses. Whether you must pay alimony, child support or both, filing for bankruptcy won’t eliminate these debts. After filing for bankruptcy, alimony and child support payments continue as usual.
Debts caused by criminal actions
While less common than other debts, some people also owe other parties money because of a judgment in a criminal case. These actions can include maliciously injuring other people or properties. Bankruptcy will also not cover payments for deaths or injuries incurred if you were a driver under the influence of alcohol or drugs.
Filing for bankruptcy typically resolves medical and credit card debt. It can also discharge some personal loans. While limited exemptions exist, bankruptcy won’t absolve most student loan-related expenses.
While there are limits about what will and will not be discharged by bankruptcy, it’s an option that has helped many Michigan residents get a financial fresh start.