Getting rid of debt in bankruptcy is known as “discharging” debt. The primary function of Chapter 7 bankruptcy is to allow debtors to discharge their debt; however, not all debts are eligible to be discharged. For example, most tax debts cannot be discharged in bankruptcy. In order for income tax debt to be discharged in bankruptcy, there are certain requirements and criteria which must be met including the following: the tax debt must be related to a tax return that was due more than three years prior to the filing of the bankruptcy petition (including extensions) and filed at least two years prior to the filing of the bankruptcy petition. Further, the tax assessment must have occurred at least 240 days prior to the filing of the bankruptcy petition and the taxpayer must not be guilty of tax fraud or evasion.
Alimony, child support, and student loans are examples of other debts which can not be discharged in Chapter 7 bankruptcy. Only in special circumstances are there exceptions to this rule.
An experienced and knowledgeable bankruptcy attorney can help you determine if filing bankruptcy is right for you. If you reside in Buncombe County or Western North Carolina and are considering filing bankruptcy, please call our office and schedule an appointment for a free consultation.