Bankruptcy helps hundreds of thousands of people every year clear out old
debts and get a new financial start. However, there are some debts that
a bankruptcy cannot erase, and will stay with the debtor until they are
paid. If you are planning on filing bankruptcy in the future, learn more
about the types of debts that cannot be discharged.
The bankruptcy code outlines 19 different types of debts that cannot be
discharged. Some of these categories are very rare, and will not be applicable
to most debtors. However, some of these debts are relatively common and
could become an issue in a bankruptcy case.
Nondischargeable debts usually cannot be wiped out in bankruptcy for the
general welfare of society. The federal government has decided that some
debts are so important that a person will always have an obligation to
pay them. For example, back child support is almost always a nondischargeable
debt. Our society believes that caring for and providing financial support
for a child is paramount, and that parents should not be able to relieve
themselves from this obligation by filing for bankruptcy. As a result,
debts for child support cannot be erased. Similarly, obligations to pay
alimony or debts owed due to a divorce case also cannot be discharged
Additionally, most types of tax debts cannot be discharged in bankruptcy.
Since the federal government makes the bankruptcy laws, the federal government
has the ability to make sure that the debts owed to it are paid. There
are exceptions for very old tax debts, but in general the federal government
is not willing to allow debtors who owe back taxes to avoid their obligations
by filing for bankruptcy. Likewise, fines and penalties owed to government
agencies are also not dischargeable.
One of the biggest sources of debts that most people have comes from student
loans. Unfortunately for debtors, student loans are almost always nondischargeable
debts. While student loans can occasionally be discharged when the borrow
suffers a severe disability, it is very difficult to meet the criteria
to have a student loan discharged in bankruptcy. Most debtors will need
to continue paying their student loans long after their bankruptcy cases end.
Additionally, debts related to criminal actions are also not dischargeable.
If a person owes criminal fines, court costs, or restitution as a result
of an arrest, he or she will still be responsible for paying these fines.
There is also specific exception in the bankruptcy code which prohibits
people who owe personal injury judgments due to driving under the influence
from discharging that debt.
Finally, and logically, only debts that are actually listed on the bankruptcy
petition can be discharged. If a person forgets to include a debt in the
bankruptcy petition, that debt cannot be discharged. For that reason,
it is important to work with an experienced bankruptcy attorney who will
be sure to include all types of applicable, dischargeable debts.
At Loan Lawyers, our South Florida bankruptcy attorneys understand the
ins and outs of the bankruptcy code, and will be sure to provide you with
accurate and helpful legal advice about your case. If you are considering
filing for bankruptcy, schedule a free initial consultation with our office
today by calling (888) FIGHT-13 (344-4813).