Most of your debts can be discharged in a bankruptcy. Some debts, however, are nondischargeable. In other words, they cannot be wiped out in a chapter 7 bankruptcy proceeding or at the end of a chapter 13 repayment plan. Some kinds of debt can never be discharged. Certain other kinds of debt can be discharged unless the Bankruptcy Court agrees with a creditor that the debt is nondischargeable.
Most student loan debt is not dischargeable. In rare circumstances, a debtor can claim that student loan debt causes an extreme hardship and can obtain a discharge, but it is very difficult to persuade a Bankruptcy Court to discharge a student loan debt.
Some income tax debt can be discharged in bankruptcy, but only if you filed your required tax returns at least two years before you file your bankruptcy petition, and only if the tax debt is more than three years old. In addition, if your tax returns are found to be fraudulent or if you evaded your taxes, your tax debt cannot be discharged. Other kinds of tax debt, including payroll taxes, can never be discharged. Even if your income tax debt is discharged, federal tax liens that have been recorded against your property remain in effect.
Damage Judgments from Drunk Driving
If you are sued and a judgment is taken against you, the judgment debt can usually be discharged in bankruptcy. If the judgment is for damages resulting from a drunk driving accident, however, the debt cannot be discharged.
Alimony and Child Support
Back payments or arrearages for child support and for alimony (known in some states as spousal maintenance) are nondischargeable. In addition, orders to pay attorney fees in child support and child custody cases are usually nondischargeable.
Fines and Penalties
Most fines that are imposed by a court and most penalties that are assessed by a government agency are nondischargeable. Court-ordered restitution in a criminal case is also nondischargeable.
Certain Other Debts
Condominium fees and fees owed to a homeowner’s association are usually nondischargeable. Some debts owed to retirement plans cannot be discharged in bankruptcy.
The debts you listed in your bankruptcy petition are usually the only debts that are discharged. If you did not list a debt in your petition, it is not discharged unless your creditor had actual notice or knowledge of your bankruptcy filing.
Your creditors have a right to object to a discharge of certain kinds of debt. If they do not object, the debt is discharged. If they object, the court holds a hearing and decides whether the debt can be discharged. Objection to discharge can be made to:
- Cash advances totaling more than $925 that you received less than 70 days before filing bankruptcy, unless you intended to repay those advances;
- Credit card purchases for certain “luxury” goods totaling more than $650 and made within 90 days of the date you file bankruptcy, unless you intended to pay those charges;
- Debts obtained by fraud; and
- Debts that result from intentional injuries to persons or property that you caused.
Denial of Discharge
The Bankruptcy Court can deny a discharge of dischargeable debts if the court determines that committed perjury or fraud, tried to deceive the court or to conceal your property from creditors, failed to provide necessary documents, disobeyed a court order, did not wait long enough after your last bankruptcy discharge before filing a new petition, or failed to complete a course in financial management before the deadline for course completion.
Bankruptcy is complex and many answers depend upon your specific situation. If you still have questions you can schedule a free consultation with a bankruptcy attorney.