Are student loans dischargeable in bankruptcy?
Will bankruptcy set off the IRS's audit radar?
Can my bankrupt ex-husband get out of paying child support?
Can we get a home loan if my husband has a past bankruptcy?

I've got $60,000 left in student loans, and I've been repaying them for ten years already. If I file for bankruptcy, will this debt be wiped out?

The rules for discharging student loans in bankruptcy have gotten tougher over the years. Currently, student loans are dischargeable only if you can prove to the court that repaying them would cause you undue hardship, which is a pretty tough standard to meet. And to make this showing, you'll have to file a separate action in your bankruptcy case.

A bankruptcy court will discharge a student loan for undue hardship only if it believes you'll never be able to pay the loan back. For example, if you have a permanent disability and no future ability to work, and you have made reasonable efforts to pay off as much of the loan as you can by using the various non-bankruptcy options available, the court might find that paying back the loan is more than should be asked of you.

If you file for Chapter 13 bankruptcy, you can include your student loans in the repayment plan, and try to make a dent in them over the life of your plan. However, you will still owe whatever student loan debt remains when you complete your plan, unless you can convince the court that it would be an undue burden. Be warned, however, that bankruptcy courts are typically very reluctant to discharge student loans.

I am preparing to file for Chapter 7 bankruptcy and have been advised that the IRS will look at this as a HUGE red flag. Apart from not understanding why, I am more curious as to what to expect. Do you have ideas on this?

We are not aware of any policies -- written or unwritten -- targeting bankrupts for audits or other IRS problems. With more than 1.5 million people filing for bankruptcy in each of the first five years of the new millennium, the IRS would quickly run out of person power if it targeted or specially screened the tax returns of former bankrupts. The agency is already hard-pressed hectoring souls for nonpayment and other such deadly sins. You probably don't have much to worry about from its quarters.

A bankruptcy court just notified me that my ex-husband is filing for Chapter 7. I am one of his creditors, because: a) he owes back child support, including for medical bills; and b) he's not paying current child support. Will he be able to wiggle out of these debts?

Bankruptcy can wipe out many types of debt, but child support is not one of them. Certain debts (referred to legally as "priority debts") are considered so important that they survive bankruptcy -- and child support is first on the priority debt list. This means that your ex will still owe you this money, despite filing for bankruptcy.

My husband and I are trying to prequalify for a home loan. He was married once before and filed for bankruptcy; this was over eight years ago, but it still shows up. We have also paid off a lot of old debt, but it still appears on our credit report as not paid. What can we do to set the record straight?

It's time that you and your mate took active steps to clean up your credit file and get the correct status showing that the bills are paid off. If you haven't already done so, complete the "request for reinvestigation" form which is included with your credit report, or write a letter to the credit bureau, listing all of the incorrect and old information and requesting that the bureau remove or reinvestigate the disputed information.

If the bureau doesn't respond within 30 days, send a follow-up letter requesting that they remove the disputed information. If the bureau claims the information is accurate, contact the creditors directly. If the creditor agrees that the bills are paid off, get it in writing. Then, send this letter to the credit bureau. Or, provide the name and phone number of the creditor to the bureau so it can call and verify the information. If the creditor will not assist you, call the credit bureau customer service number and ask for help. Once your file is current, try again to prequalify for a mortgage.

Because you're dealing with a number of complications, it would probably be best for you to work with a mortgage broker. You should be able to find a mortgage for which you can qualify, but don't bank on finding the best terms -- that is, you'll probably need to put 20% to 25% down, pay high points, pay higher than average interest, or even get a cosigner.