For many people, Chapter 7 bankruptcy offers a path out of debt. However, not all debts can be discharged under the Bankruptcy Code. Those debts that cannot be cleared must be repaid by the debtor after bankruptcy.
What debt is not cleared by filing Chapter 7 bankruptcy?
The U.S. Bankruptcy Code lists several exceptions to discharge. The following debts are non-dischargeable according to U.S. Code § 523.
- Some unpaid taxes, tax penalties, and tax liens depending on various factors and the nature of the tax.
- Debt acquired through fraudulent or deceitful means.
- Luxury goods and services purchased with credit within 90 days before a bankruptcy filing unless the presumption of non-dischargeability is rebutted.
- Consumer credit obtained within 70 days before filing bankruptcy unless the presumption of non-dischargeability is rebutted.
- Domestic support obligations, such as child support or alimony.
- Debts to a spouse, former spouse or child of the debtor arising from a divorce or separation proceeding in the nature of property/asset division (not a domestic support obligation).
- Debt incurred as a result of willful and malicious injury of another party and/or their property.
- Debt incurred as a result of death or personal injury caused by operating a vehicle while intoxicated.
- Student loans, unless it can be shown such debt poses an “undue hardship” on the debtor or the debtor’s dependents.
- Debt that has been denied discharge under a previous bankruptcy filing.
- Fees or assessments to a membership association due and payable after the bankruptcy petition’s filing.
- Debts in the nature of a fine or penalty payable to the government.
- Court fees.
- Debt owed to a pension, profit-sharing, or similar plan.
- Debt incurred for fraud, embezzlement or defalcation while the debtor was acting in a fiduciary capacity.
Can these debts be discharged under Chapter 13?
Chapter 13 does allow a more expansive discharge of debts, including some debts that are non-dischargeable under Chapter 7. Debts for willful and malicious injury to property and those incurred as a result of divorce settlements can both be discharged under Chapter 13. However, the debt is only discharged by completing the payments required by the court-approved payment plan.
Get help navigating complicated bankruptcy cases.
In some cases, bankruptcy is a simple, straightforward process. However, when the debtor has many assets and more complex obligations, an attorney prevents errors and missteps that may incur more debt and stress in the long run. Speak with a debt relief counselor before you file for bankruptcy if you fear your debt may fall into the non-dischargeable categories established by the U.S. Bankruptcy Code.
The Law Offices of Jeffrey Lohman, P.C. is considered a debt relief agency pursuant to federal law. We are attorneys who help people file for bankruptcy relief under the Bankruptcy Code.