Taxes, Loans and Bankruptcy: Discharge or Non Dischargeable

Ian C. Langtree - Writer/Editor for Disabled World (DW)
Published: 2010/09/20 - Updated: 2025/02/20
Publication Type: Informative
Category Topic: Loans and Grants - Publications List

Page Content: Synopsis - Introduction - Main - Insights, Updates

Synopsis: This article provides insights into the complexities of discharging debts, particularly in the context of bankruptcy, highlighting which debts may be eligible for discharge and which are not. It addresses crucial topics such as tax debts, student loans, and support payments, making it particularly relevant for individuals facing financial difficulties, including seniors and those with disabilities. The discussion on the current state of student loans and the potential for future changes offers a timely perspective for those burdened by educational debt - Disabled World (DW).

Introduction

Discharge or Non Dischargeable - That is the Question! - It often happens that for one reason or another you owe back taxes. The IRS can be relentless in their pursuit for payment.

Main Content

Taxes

"The only thing certain is death and taxes" - Ben Franklin.

It may seem like filing for Bankruptcy would get the tax man off your back, but this is not necessarily the case. The Franchise Tax Board and the Internal Revenue Service really don't like to lose money.

How can you tell if your tax debt is likely to be discharged with a Chapter 7 bankruptcy?

Here is a good rule of thumb. If you tax debt is more than 4 years old and was filed accurately and on time then those debts might be dischargeable.

The final say is still given to the IRS or Franchise Tax Board. In conclusion, some tax debt is sometimes dischargeable - sometimes.

The Cost of an Education

Student loans are never dischargeable.

If a loan was granted for the purposes of education then currently that debt can not be discharged under any circumstance. I say currently because our President has put in motion some changes that may help the next group of broke, but educated, post graduates. The Wall Street Journal recently reported that student loan debt has now surpassed credit card debt. One can only hope that soon a person struggling for financial freedom will be able to discharge these debts also.

Support Payments

Child Support and Spousal Support are never discharged with bankruptcy. Unless you can prove that you do not owe those debts, they are yours to pay.

The law specifically states that all debts "to a spouse, former spouse, or child of the debtor, for alimony to, maintenance for, or support of such spouse or child..." will not be discharged in bankruptcy.

Insights, Analysis, and Developments

In conclusion, understanding the nuances of non-dischargeable debts is crucial for anyone considering bankruptcy, particularly vulnerable populations like seniors and individuals with disabilities. This knowledge not only prepares them for the realities of bankruptcy proceedings but also empowers them to take control of their financial futures. By recognizing which debts will remain post-bankruptcy, individuals can better strategize their financial plans and seek additional resources or assistance as needed

Author Credentials: Ian is an Australian-born writer, editor, and advocate who currently resides in Montreal, Canada. He is the founder and Editor-in-Chief of Disabled World, a leading resource for news and information on disability issues. With a global perspective shaped by years of travel and lived experience, Ian is a committed proponent of the Social Model of Disability-a transformative framework developed by disabled activists in the 1970s that emphasizes dismantling societal barriers rather than focusing solely on individual impairments. His work reflects a deep commitment to disability rights, accessibility, and social inclusion. To learn more about Ian's background, expertise, and accomplishments, visit his full biography.