Thursday, January 23, 2014

Unfortunately Not All Debts Go Away When You File Bankruptcy. Here's a list:

Debts Not Dischargeable in Chapter 7 Bankruptcy

Generally speaking, filing bankruptcy will remove a debtor’s personal liability for a debt upon receiving discharge from the bankruptcy court. However, there are certain types of debt that are typically not dischargeable.

Debts Automatically Not Dischargeable.

The following debts are automatically nondischargeable in bankruptcy, and do not require a hearing and/or court order to make them nondischargeable.

Domestic Support Obligations. Court ordered domestic support obligations, child or spousal support (alimony), and arrears on those obligations are not dischargeable. This can also include attorney fees related to custody and support cases, when they are in the nature of support.

Certain Tax Debt. Recent taxes are not dischargeable, but if specific requirements are met, older taxes may be eligible for discharge. Talk with an experienced bankruptcy attorney, or see our other articles to find out more.

Student Loans. With very limited exceptions, student loans are not typically dischargeable. This includes both private and federal student loans.

Debts to Government Agencies. Fines and penalties owed to government agencies are not dischargeable in Chapter 7, but may be dischargeable in Chapter 13 bankruptcy.

Retirement Plans. Money borrowed from some tax exempt retirement plans, like a 401k, are not dischargeable in bankruptcy.

Court Fines/Penalties. Court fines and penalties, such as criminal restitution or other criminal fines, are not dischargeable.

Unlisted Debts. Debts not listed in a bankruptcy petition may not be discharged, if the case is determined to be an asset case, where the Trustee liquidates assets to pay creditors.

DUI Personal Injury. Debts related to personal injury caused by an intoxicated driver will not be discharged.

Debts That May Not Be Dischargeable.

The following debts may not be discharged if a creditor objects to their discharge, and convinces the bankruptcy court that they are of a type that should excepted from discharge. Failure by the creditor to file an objection to a debt’s dischargeability will result in that debt being automatically discharged.

Luxury Goods Purchased With Credit Cards. Luxury goods, anything not necessary for the health and support of the debtor or their family, purchased with a single credit card amounting to more than $650 combined within 90 days of filing bankruptcy, may not be discharged. A creditor must object and show that the debtor had no intention of repaying the debt. If the debtor establishes an intent to repay, or that the items were, in fact, necessary, then the debt may be discharged.

Cash Advances. Cash advances totaling more than $925 from a single creditor, taken within 70 days of filing bankruptcy, may not be discharged, if debtor lacked intent to repay the debt.
Willful/Malicious Injury. Debts resulting from the injury to a person or property that caused willfully and maliciously, may not be dischargeable.

Fraud/False Pretenses. Any debt incurred for money, property, or services, to the extent they were obtained by false pretenses, false representation, or actual fraud, may not be dischargeable.

Bankruptcy Still An Option.

While certain debts may not be dischargeable, there are exceptions to some rules. Even if there is not an exception available that would allow a person to discharge a debt that is typically not dischargeable, bankruptcy can still be a great option. If there are debts preventing the payment of nondischargeable debts, bankruptcy can eliminate other debt, freeing up funds to pay those debts that must be paid. Additionally, filing a chapter 13 bankruptcy can potentially allow a person to get caught up on and/or pay for nondischargeable debt, while eliminating other unsecured debt, like credit cards, medical debt, etc. Call us to arrange a free consultation to discuss your debt relief options at 503-352-3690. Just because some debts may not be dischargeable, doesn’t mean you can’t walk out of bankruptcy debt free!