The intricate landscape of bankruptcy in New Jersey can be a daunting task, especially when you are not sure what it covers or leaves out. At Goodgold West Diaz Bennett & Klein LLC, our bankruptcy attorney in Millburn, NJ strives to provide our clients with a comprehensive understanding of the bankruptcy process. While most discussions on bankruptcy focus on what debts it can help eliminate, understanding what bankruptcy does not cover is equally critical. In this article, further understand non-dischargeable debts, secured debts, luxury purchases, assets not protected by exemptions, and certain tax debts in the realm of New Jersey bankruptcy.
Non-Dischargeable Debts
Contrary to popular belief, filing for bankruptcy doesn’t mean you are absolved from all your financial obligations. Some debts are non-dischargeable under the United States Bankruptcy Code, meaning they persist even after the bankruptcy process concludes. If you are considering bankruptcy in New Jersey, understanding these limitations is crucial.
Non-dischargeable debts are financial obligations that cannot be wiped clean through bankruptcy. Common examples in New Jersey include:
Child Support and Alimony
Child support and alimony are among the most sacrosanct of financial obligations. Bankruptcy will not relieve you of your duty to make these payments. They are prioritized in the legal system to protect the welfare of children and the financial stability of the less-earning spouse. Failure to make these payments post-bankruptcy can result in legal repercussions.
Student Loans
In most cases, student loans are another category of debt generally not dischargeable through bankruptcy. There are some exceptions, like proving “undue hardship,” but these are rare and difficult to establish.
Debts From Personal Injury or Death Caused by Drunk Driving
If you’ve been convicted of causing personal injury or death while driving under the influence of alcohol or drugs, the associated debts are non-dischargeable. This is an ethical standpoint in the legal system to discourage reckless behavior. The debt stands as a lasting financial obligation, symbolizing the long-term consequences of such actions.
Legal Fines and Penalties
Fines and penalties imposed by a court for legal violations, whether criminal or civil, cannot be erased through bankruptcy. These include but are not limited to, criminal restitution, court fines, and certain penalties. These obligations are viewed as punitive and integral to maintaining societal standards.
Understanding the nature of these non-dischargeable debts provides a fuller picture of what bankruptcy can and cannot achieve. Before making any financial decisions, consult an experienced bankruptcy attorney to guide you through the nuanced landscape of New Jersey bankruptcy law.
Assets Not Protected by Exemptions
Certain personal assets like your home or car may be protected under New Jersey’s bankruptcy exemptions, but not all assets fall under this safety net. Non-exempt assets can be sold off by the bankruptcy trustee to pay off creditors. Knowing which of your assets are not protected is essential for a thorough understanding of your financial standing post-bankruptcy.
Tax Debts
Certain tax obligations are also non-dischargeable in a New Jersey bankruptcy. For instance, payroll taxes and fraud penalties are typically not eliminated through bankruptcy. However, income taxes can sometimes be discharged if they meet specific criteria. Consult a bankruptcy attorney in Millburn, NJ, for advice tailored to your unique tax situation.
Luxury Purchases and Cash Advances
In New Jersey bankruptcy law, luxury purchases and cash advances taken shortly before filing for bankruptcy are generally non-dischargeable. The court assumes that any large luxury purchases or substantial cash advances taken 70 to 90 days prior to filing were made in anticipation of bankruptcy and are thus exempt from discharge.
Not all debts and obligations can be cleared through bankruptcy, and knowing these limitations upfront is crucial for informed decision-making. If you’re facing financial challenges and considering bankruptcy in New Jersey, reach out to Goodgold West Diaz Bennett & Klein LLC. Our experienced team can guide you through the complexities of the bankruptcy process and help you make the best choices for your financial future. Contact us today for a consultation.