Debts You Cannot Discharge in Bankruptcy Text Size:

Bankruptcy offers a "fresh start" when you find that you're overwhelmed by your debts. People seek bankruptcy relief for a variety of reasons, and sometimes circumstances, such as job loss, illness or catastrophe get the best of those who are otherwise financially responsible. A person's poor financial decisions and irresponsibility result in bankruptcy as well. The Bankruptcy Code strikes a balance between a debtor's need for a "fresh start" and the fact that some debts must be repaid. The result is that there are some debts that won't be discharged in your bankruptcy case.

What Is Discharge?

In both Chapter 7 (liquidation) and Chapter 13 (readjustment of debts), the bankruptcy court will grant you a discharge from your debts. This means that you will have no further responsibility for the discharged debts, and your creditors can take no further collection actions against you.

Not All Debts Are Included

Certain debts can't be discharged in bankruptcy; the Bankruptcy Code lists 21 categories of such debts.

In a Chapter 7 case, the most common types of debts that can't be discharged are:

• Taxes and tax liens
• Student loans
• Alimony and child support (domestic support obligations)
• Debts obtained through fraud, false pretenses or false representation
• Debts you failed to schedule in time to allow creditors to file proofs of claim (unscheduled debts)
• Debts for fraud while you were acting in a fiduciary capacity, or for embezzlement or larceny
• Debts for willful and malicious injury
• Debts for fines or penalties to governmental units
• Debts for judgments in wrongful death or personal injury lawsuits resulting from motor vehicle, vessel or aircraft accidents while you were intoxicated
• Condominium or cooperative association fees or assessments

If your bankruptcy case is under Chapter 13, you won't be discharged from the following types of debts:

• Child support and alimony (domestic support obligations)
• Student loans
• Fines and restitution
• Certain taxes, such as withholding taxes if you had employees, or taxes connected to fraudulent tax returns or tax evasion
• Debts incurred through fraud
• Debts for fraud while you were acting in a fiduciary capacity, or for embezzlement or larceny
• Debts for willful and malicious injury
• Judgments in wrongful death or personal injury cases arising from your intoxication
• Unscheduled debts
• Debts incurred after filing your case, which weren't included in your Chapter 13 plan
• Debts that are nondischargeable under other laws, for example amounts owed for certain health education programs
• Interest owed on nondischargeable debts

Questions for Your Attorney

• What typically happens to a debt if it isn't discharged? How likely is it that a creditor will continue collection efforts?
• How are nondischargeable debts treated if I haven't paid them off and I file for bankruptcy in the future?
• Can I try to negotiate with creditors to settle my nondischargeable debts - will they take a settlement if it means getting paid something? Can I do the same with amounts I owe to my ex-spouse for child support and alimony?

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