Common Sense Answers to Bankruptcy Questions

Bankrupt shop, signes.

Bankrupt shop, signes. (Photo credit: Wikipedia)

Bankruptcy questions are asked everyday on the multitude of bankruptcy forum websites. It is important to give common sense answers so the would be bankruptcy filers can gain the knowledge necessary to make their decision about filing for bankruptcy protection.

Here are some common sense answers to three bankruptcy questions:

  1. Is Fixing a car A/C before filing bankruptcy considered a luxury item?

    There is normally a 12 month look back period a trustee may look back on your finances to see if you have made any preferential payments to your creditors. If preferential payments are found, the payments can be retrieved by the trustee to divide amongst your creditors in the priority bankruptcy law prescribes. When so called luxury items are found that you have spent money on just prior to filing, the bankruptcy trustee can retrieve the money received for those items. Under certain circumstances, the trustee can see that fraud charges are filed against you if he expects fraud in financial dealing handled during this time.

    Fixing a necessity like an automobile air conditioner is probably not going to be looked at by the trustee as a luxury item, especially if you have children or use your car in your work.

  2. Is Asperger Syndrome enough of an undue hardship to have your student loan debt discharged in bankruptcy?

    Evidently, it is. Carol Todd recently had close to $340,000 in student loans discharged in a bankruptcy after petitioning the court for relief from her loan debts. Todd, who had only an equivalency high school diploma and an online doctorate, entered law school where she ran up the student loan amounts for attending. After dropping out of school and realizing she could not pay the student loan amounts with the jobs she was able to get, she filed for bankruptcy protection. At 63 years old, a bankruptcy court judge awarded the senior lady a discharge on all the student loan debt.

    To prove undue hardship, bankruptcy law allows each bankruptcy district a lot of leeway in determining what is and what is not undue hardship. Many bankruptcy districts define undue hardship as being able to show permanent disability accompanied by absolutely no possibility of repayments to the lender within in your lifetime.

    Many feel Asperger Syndrome, although a lifetime disease, does not disable a person to the point of self sufficiency while others disagree. At 63 years old, Todd would probably not have had much chance of paying the large amount of student loans off in her lifetime.

  3. Can local back taxes be discharged in bankruptcy?

Certain taxes are exempt from bankruptcy discharge except under certain circumstances. Income taxes, certain property taxes, certain excise taxes, and certain other taxes cannot be discharged in a bankruptcy. Some income taxes can discharged under certain circumstances.

Any tax liability that occurs after filing bankruptcy cannot be discharged.

Most bankruptcy questions have common sense answers, but no one is born with that knowledge. Since bankruptcy laws can be complicated at times, you may want to seek out the assistance of an experienced bankruptcy lawyer to help provide you with common sense answers to your bankruptcy questions.

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