When debtors file for bankruptcy under Chapter 7 or Chapter 13, the goal is to get a discharge of their debts. Once the bankruptcy court discharges debts in a bankruptcy case, the filer is no longer to be held liable for them. The majority of consumer debt like credit card debt and medical bills can be discharged. Nonetheless, there are certain debts that are inherently non-dischargeable. This means that these cannot be wiped out by the bankruptcy process. Congress decided that these shouldn’t be dischargeable for reasons of public policy.
19 Non-Dischargeable Debt Categories
Non-dischargeable debt can be sorted into 19 categories. This means that if you were unable to pay obligations that fall under any of these categories, the creditors can still collect despite your bankruptcy discharge. There are non-dischargeable debts that aren’t subject to a hearing, but there are others that can be discharged if the creditor does not counter the intent to discharge them.
Dischargeable in Extraordinary Circumstances
For the following debts, you have to prove extraordinary circumstances for them to be discharged since they are non-dischargeable as a rule.
- Debts you didn’t include in your bankruptcy petition unless your creditor is aware of your filing.
- Alimony or child support.
- Attorney’s fees for your child support or custody case.
- Student loans.
- Debts from unpaid condo or cooperative housing fees.
- Different types of taxes.
- Debts from tax-advantaged retirement plans.
- Government penalties and fines.
- Personal injury debts from a DUI incident.
- Criminal restitution as well as other court penalties and fines.
Dischargeable when Unchallenged
Non-dischargeable debts that require creditors to challenge a discharge during bankruptcy proceedings to remain non-dischargeable will have to be addressed in bankruptcy court. You and the creditor will both be allowed to present your arguments. Creditors who fail to object to the discharge or convince the bankruptcy judge to agree with them won’t be able to collect from you as the debt owed them will be discharged. This category usually involves:
- Credit card debt involving luxury goods that are worth over $650 collectively, incurred in the 90 days before the bankruptcy filing, and owed to just one creditor.
- Debts that were obtained fraudulently or under false pretenses.
- Debts caused by willful and malicious harm or injury to a person or property.
There are some Chapter 7 (liquidation) bankruptcy cases wherein the bankruptcy courts deny the filers’ a discharge due to their lack of compliance with the requirements and rules. For instance, if you lie under oath, destroy records, fail to account for missing assets, or hide property with the intent to defraud creditors, your debts may not be discharged even if they’re technically dischargeable.
Your creditors, the bankruptcy trustee, or the US trustee may also object to a discharge, but denial or approval is ultimately the bankruptcy court’s call.
Discharge denial may also occur if you repeatedly file bankruptcy with very short windows of time between filings. There are rules in place to discourage frequently filing for bankruptcy. For instance, with successive Chapter 7 cases, the filer cannot receive a discharge in the second bankruptcy case if it is filed within eight years of the first case’s filing date. With successive Chapter 13 (reorganization) cases, the filer cannot get a discharge if the second case is filed within two years of the first case’s filing.
When it comes to successive bankruptcy filings involving different bankruptcy chapters, the order of the filings dictates the length of time the filer has to wait in order to receive a discharge in the second filing. If the first case is filed under bankruptcy chapter 13, the debtor generally cannot file under Chapter 7 and obtain a discharge within six years of the first case’s filing date. If the first filing is under Chapter 7 with a discharge granted, the filer cannot receive another discharge in a Chapter 13 filing within four years of the first bankruptcy filing.
Need Bankruptcy Guidance? Contact an Arizona Bankruptcy Attorney Today!
When financial problems begin to overwhelm you, you need to find the right debt relief solution to remedy what might cause you severe financial distress. If you need advice on declaring bankruptcy, it’s best to consult a bankruptcy lawyer. A review of your case will tell you beforehand what your chances are at getting a discharge for which debts. For legal advice and assistance on your petition for bankruptcy, call us at Zolman Law to speak with one of our bankruptcy attorneys.