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!
No comments:
Post a Comment