Dealing with Non-Dischargeable Debts

Many debts may be eliminated, or discharged, through bankruptcy. However there are debts that cannot be eliminated through bankruptcy. Such types of debts that cannot be eliminated through bankruptcy proceeding are called non-dischargeable debts.

Loans including educational loans are generally non-dischargeable unless payment would impose an undue hardship on the debtor. Bankruptcy law provides heightened protection for individuals owed domestic support obligations. Child support and alimony cannot be discharged by filing a bankruptcy. Debts incurred in the course of a divorce or separation agreement cannot be discharged in a bankruptcy. Also, debts resulting from a willful or malicious act may not be discharged. Debts resulting from intentional torts and debts incurred by fraud are presumably dischargeable. In this type of situation, the creditor must file a request with the court to have the debt declared non-dischargeable.

Non-dischargeable debts include:

• debts not listed in the bankruptcy petition;

• student loans;

• most federal, state and local taxes;

• money borrowed on a credit card to pay those taxes;

• debts for personal injury or death caused by driving while intoxicated or under the influence of drugs;

• fines or penalties for violating the law, this includes traffic tickets and criminal restitution; and

• child support and alimony, and other debts of this nature of support.

In addition, a creditor may ask a court to determine that some debts are non-dischargeable, including:

• debts incurred because of fraud;

• debts for willful injury to another’s person or their property;

• divorce and other property settlements; and

• debts from embezzlement.

Both Chapter 7 Bankruptcy and Chapter 13 Bankruptcy prohibit discharge of the above debts. If you file for Chapter 7 Bankruptcy, you will still be held responsible for repaying these debts after your discharge. Under Chapter 13 Bankruptcy, these debts must be paid in full in your plan, or the balance will still remain at the end of your plan.


Inside Dealing with Non-Dischargeable Debts