When it’s time to wash your hands of burdensome debt, bankruptcy is often a good bet—especially for credit card balances, personal loans, and medical bills. No matter what you do, however, some bills just don’t go away—not even in bankruptcy. They’re called “nondischargeable” debts, and if you have one, you’re likely stuck with it.
Debts Incurred After You File Bankruptcy
Any debt you have before you file for bankruptcy will go away (get wiped out) as long as it’s dischargeable. But, after you file—even while the bankruptcy case is still pending—debts you incur remain yours.
To learn more, see What Happens to Debt After I File for Bankruptcy?
A common question potential bankruptcy filers ask is whether it’s possible to keep a house or car after filing. The answer is yes—as long as you continue to make the payments. Mortgages and car payments are common examples of what are called “secured” debts. Any time you promise to give back the purchased property if you don’t make your payments, you have a secured loan. Secured loans are nondischargeable in bankruptcy (unless you give the property back).
To learn more about secured loans, see Secured Claims and Liens in Bankruptcy.
Unsecured Priority Debts
Bankruptcy wipes out most unsecured debt, but it doesn’t eliminate “priority” unsecured debt. There’s almost no way to get rid of priority debts. They also get paid before other unsecured debts if money is available to pay creditors. Here are some examples of unsecured priority debts.
Domestic Support Obligations
Your spousal support or child support payments aren’t dischargeable in bankruptcy. Child and spousal support generally encompass amounts necessary for the child or former spouse to meet basic living requirements. (See Personal Bankruptcy and Child Support.) Money owed as a result of a marital property division is different than this kind of support—in some states it’s dischargeable.
Bankruptcy crosses lots of minds when the tax man cometh. While it isn’t impossible to discharge unpaid income tax debt, it’s tough to meet the requirements.
To get an idea about the stringency of these requirements, see Can I Get Rid of Tax Debt in Bankruptcy?
Other Government Debts
Like taxes, many debts owed to the government (such as fines and penalties) are going to stay with you till the grave. But not all. If you aren’t sure how a given government debt will be treated, a bankruptcy attorney can assist you.
For more information, see Can I Get Rid of Debt I Owe the Government in Bankruptcy?
Even though student loans aren’t “priority” unsecured debts, you can’t get rid of them in bankruptcy—that is, unless you can demonstrate that you have an “undue hardship.” A disability that prevents you from working can qualify as an undue hardship.
To learn more about student loans and bankruptcy, see Personal Bankruptcy and Student Loans.
Debt From Fraud, False Pretenses, and False Representation
Trying to work the system can come at a steep price. One consequence might be your debt not being discharged. The trick here is that debts resulting from fraud, false pretenses, or false representation are dischargeable unless your creditor files a lawsuit in the bankruptcy case, called an “adversary proceeding.”
To learn more about fraud and what must be proven in the adversary proceeding, see What Happens to Debt Resulting from Fraud in Bankruptcy?
Debts You Didn’t List in Your Asset Case
Contrary to common belief, “not including a debt in bankruptcy” isn’t an option. You’re required to list all of your debts when you file for bankruptcy. If your case is an asset case (one where there is money to distribute to creditors), and you fail to list a debt, the omitted debt is nondischargeable.
To learn more, see Do I Have to Include All Debts in My Bankruptcy?
Other Nondischargeable Debts
Here are some other nondischargeable debts:
- certain property taxes
- taxes withheld from employee wages
- debts determined nondischargeable in a previous bankruptcy
- some condominium dues and fees
- loans owed to pension or retirement plans
- debts owed as a result of violating securities laws and regulations
- debts for willful and malicious injury (such as purposefully stabbing someone), and
- money owed as a result of wrongful death or personal injury to another caused by operating a car, boat , airplane , or other vehicle under the influence of alcohol or drugs.
How Filing Chapter 13 Can Help
When you file for bankruptcy, there are several chapters to choose from; your choice should depend on your needs. While Chapter 7 is quick, it rarely helps solve nondischargeable debt problems. However, Chapter 13 allows you to spread out payments on nondischargeable debts over three to five years, depending on your income.
To learn more, see How Can Chapter 13 Help Me With Nondischargeable Debts?
Questions for Your Attorney
- If a debt isn’t dischargeable, can the creditor continue to collect against me while I’m in bankruptcy?
- If it isn’t clear whether a debt is dischargeable, can I ask the court to make a determination?
- Will I be charged fees if I pay off my nondischargeable debts in a Chapter 13 repayment plan? If so, how much will my total monthly payment be?
- How does the law in my state affect my case?