Options You Can Use For Debts That Cannot Be Included In Chapter 7 Bankruptcy

If you are swimming in piles of debts and cannot find a way to even make your minimum payments on them, chances are you will continuously keep falling further behind on your bills. The only way to get out might be through Chapter 7 bankruptcy. Unfortunately though, bankruptcy may not help you with all the debts you have. There are ways to reduce and eliminate other debts that are not allowed in bankruptcies, and you may want to look into these methods if you have any of the following debts.

Back Taxes

If you owe money to the IRS for back taxes, you will not be able to get these debts discharged through bankruptcy. You will have to find a way to pay this debt if you want to prevent the IRS seizing your assets.

The IRS is often willing to allow people to make payments through installment plans. You can typically file for a request for an installment plan with the IRS. As long as you meet the eligibility requirements for this, they are likely to approve it. This would give you more time to pay your debt, and you might be able to afford it because it will offer affordable monthly payments.

If the payments will still be too high for you to afford, you could try to use an Offer in Compromise (OIC). This is a method that allows you to settle your tax debt with the IRS. If they approve it, you may end up having to pay only a portion of the total bill. You can pay this off in a lump sum, or the IRS might allow you to make payments on it.

House Mortgage

If you file bankruptcy and include your home in it, you will automatically lose your house. You do have the option of keeping your house through a Chapter 7 bankruptcy; however, the bankruptcy will not help you catch up on any past due payments.

To keep your house through your bankruptcy and to be able to afford it easier, you may want to apply for a home modification loan. This is a type of loan issued to people that are going through financial hardships.

If you are approved for the modification, the lender may reduce your interest rate and extend the length of the loan. They may even discharge part of the past due amount, or they may include it in the loan. The end result will be lower payments for you, and you will no longer be behind on your mortgage payments.

Student Loans

Student loan debt is another common problem people have, but it typically is not dischargeable in bankruptcy. You can discuss your situation with your bankruptcy lawyer, but you will most likely find out that it cannot be included. If this debt is too hard for you to pay, you may want to look into a student loan forgiveness plan. There are many of these plans around; however, they are not always easy to qualify for.

If you cannot find a plan that will work for you, you could consider taking a personal loan as a way to repay the student loans. If you do this, you could use the proceeds from your loan to pay off the debt. This might help you achieve lower monthly payments, and it might help you extend the number of payments you have.

Chapter 7 bankruptcy is a great way to get rid of medical bills and credit card debts, but it doesn't help with other debts. If you would like to learn more about this topic, contact a bankruptcy lawyer today at a firm like Wiesner & Frackowiak, LC.