When you file for bankruptcy certain debts are dischargeable and certain ones are not. The ones that are dischargeable means that you are free and clear from having to meet your obligations for them. Examples of debts that are usually not dischargeable are as follows:
Misdemeanor are usually not discharged during a bankruptcy. People convicted of a misdemeanor are usually given a fine, a sentence in the local or county jail, or both. Examples of misdemeanor fines are traffic citations. So, if you have accumulated fines of $500, for instance, those fines are not dischargeable. If, however, you were to pay the $500 with a credit card and then file for bankruptcy, the credit card bill may very well be a dischargeable debt, depending on when you pay the fine. This illustrates the practical real life effects of bankruptcy on how you pay your debts.
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Felony fines, similar to misdemeanors, are non-dischargeable under bankruptcy. The difference in the two are the type of jail that you will be sent to if you are force to serve jail time. Under felony rules, you will be sent to a federal or state prison. Under misdemeanor rules, you will be sent to a country or local prison.
Property taxes are a special situation. In some cases they will actually be discharged. This is usually the case where the taxes are more than a year old from the time you filed for bankruptcy. In practice, however, even where the property taxes are discharged, the effect on you is meaningless. This is because you will still have a tax lien on your property which means that it cannot be sold or transferred without someone paying the taxes. In other words, as far at the taxes on your property are concerned, you are pretty much in the same place as you would be if you had never filed for bankruptcy.
Most people think that income tax debts are not dischargeable. But it really depends on the circumstances. For example, if the debt is old enough and certain other requirement are met, you will be able to discharge your debt. But if the debt is more recent, you may not be able to. In addition, depending on the state where you are filing for bankruptcy, the state taxes may or may not be dischargeable as well. Where tax debts are involved, it is usually best to talk to a tax attorney and / or accountant. One instance, however, in which they are never dischargeable is where you are involved in income tax fraud.
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