Isn’t it nice to be pleasantly surprised?
Remember that escrow over payment the mortgage company sent you? Or when you found out that your tax refund was much higher than expected? How about when your friend offered you free tickets to the football game?
Yes, it’s nice when you get something good that you didn’t expect. That is the way our clients feel when they find out that they can get rid of some debt they thought they could not discharge in a bankruptcy.
People are overextended on car loans. They may owe $27,000 on a car that might only be worth $15,000. They may have a payment on this car that they can’t afford. So they say to us at Steidl and Steinberg: “I’d get rid of this car if I could but I know I will still owe the balance on it if I turn it in.”
They can get rid of the car.
Bankruptcy can, in most cases, gets rid of this balance. If you turn in the $15,000 car, and the car finance company says you now owe the difference of $12,000, bankruptcy will get wipe out the deficiency balance. It doesn’t matter if you do this before, during, and normally, even after the bankruptcy.
I have also run into some interesting debts. One was a unintentional over-payment of unemployment compensation benefits in a state the client used to live in.
“I know you can’t get rid of that,” he said.
Yes, you can. The filing of a Chapter 7 bankruptcy will get rid of this unintentional over-payment.
The same holds true for back IRS taxes. “I have done my homework”, he said, “and I know you can’t get rid of taxes.”
Well, actually, you can.
There are taxes that we can get rid of, such as older, non-liened, income taxes. Even if the tax returns are filed late, they were still filed and the taxes, for whatever reason, had not been liened. In this case the back income taxes will be discharged.
Of course, there are debts that cannot be discharged as alimony, support, equitable distribution, criminal fines, recent taxes, trust funds and sales taxes head the list. Student loans in most cases cannot be discharged, but if you read some of our earlier blog articles, your payments can be radically modified. Even those taxes can be paid in Chapter 13 reorganization plans over five or six years and at reduced interest in many cases.
Don’t let rumors or the internet tell you what debt you can or cannot get rid of in bankruptcy. Call someone who knows. Call us for a free consultation at Steidl and Steinberg.