You have a lot of different debts, and you're tired of it. You're 40 years old, and you want a fresh start. You decide that bankruptcy is the way to go. You've learned a lot about your finances over the years, after all, and you're confident that you can make better choices moving forward. You just want to eliminate all of your debt and start again with this new knowledge and this new focus.
Be careful. Bankruptcy is a great tool when used properly, but it doesn't eliminate all debt. Make sure you know what ones it won't get rid of and how best to use it to create that financial future you're seeking. Below are a few examples of debts you can't discharge with Chapter 7.
1. Child support.
The court ordered you to pay child support to your ex and your kids when you got divorced. You may have back payments that count as debt and future obligations to make monthly payments. These stay, no matter what type of bankruptcy you use. There are ways to ask for payment modifications, but you can't discharge what you owe to your kids.
2. Spousal support.
If you were ordered to pay alimony or spousal support, the same is true. You owe that money in accordance with a court order. Bankruptcy is not a way to get out of that obligation. You still have to pay what you owe and you'll need to make your future payments to your ex even after you file.
3. Recent tax debts.
You can't fail to pay your taxes for five years, get the bill from the IRS, declare bankruptcy, and avoid those tax obligations. The government makes the bankruptcy laws, after all, and it still wants the money that you owe. If you've defaulted on your taxes recently, you'll still need to pay.
4. Some student loans.
Technically, student loans are tricky. It is possible to discharge them in some cases. These are very specific, though, and they include showing that you're not likely to ever earn more money and you can't afford the student loans and still maintain a minimum standard of living -- making them a "severe hardship."
However, in most cases, student loans won't get discharged. Again, this isn't to say that they never can, but you must know that it's not as easy as discharging credit card debt or business loans.
As you can see, bankruptcy can grow complicated. You may be able to discharge some debts and not others. Make sure you understand your legal rights, exactly how bankruptcy can help, and how to proceed. The more you know about the limitations of the process, the easier it is to find the approach that will give you the financial fresh start you're after.