A bankruptcy discharge refers to the finalization of a bankruptcy proceeding, whereby the debtor is released from their debts and absolved of liability for those debts. Non-dischargeable debts are unable to be eliminated through bankruptcy and the debtor is held liable for their payment. There are many types of debts that cannot be discharged through bankruptcy, and how the debtor repays the debts varies by the type of bankruptcy filing. In a Chapter 7 bankruptcy, the debtor is liable for repaying the debts to the creditors after they receive a discharge for the debts that do qualify under the bankruptcy. Debtors filing a Chapter 13 bankruptcy can repay their non-dischargeable debts as part of their Chapter 13 repayment plan. Failure to repay the non-dischargeable debts can result in collection efforts by the creditors, including having your assets seized and liquidated.
Types of non-dischargeable debts:
Child/Spousal support payments – Bankruptcy laws prohibits child support or alimony payments from being discharged by filing a bankruptcy. These payments are deemed “domestic support obligations” and are not allowed to be eliminated through a bankruptcy. Owed payments that accrue before, on or after a bankruptcy filing are legally recoverable by the person owed. The spouse, former spouse or child have legal right to pursue collection of owed support payments, regardless of a bankruptcy filing. Additionally, debts obtained through the course of a divorce are unable to be discharged in a bankruptcy.
Taxes – Federal, state and local taxes are not allowed to be eliminated through a bankruptcy unless (a) the owed taxes are more than three years old, (b) tax returns for the previous years were filed on time and (c) the tax returns were correct when filed. Any credit card debt accrued by being used to pay for owed taxes is not dischargeable through bankruptcy.
Student loans – Student loan debt, whether government backed or privately funded loan, is not dischargeable through bankruptcy. There is an exception, in which the bankruptcy court may allow a discharge if (a) the payments would impose an undue hardship on the debtor, and (b) the debtor can prove the undue financial hardship imposed by paying the debts.
Fines resulting from criminal or negligent action – Any fines accrued as the result of criminal, fraudulent or negligent actions are prohibited from being eliminated in bankruptcy. Criminal actions, such as traffic ticket fines or criminal restitution payments cannot be discharged. Fraudulent actions such as providing incorrect information or withholding information on a bankruptcy petition will result in the debtor being held liable for such debts. Debtors are also held liable for debts obtained through negligence causing injury to another person.
Recent Credit Purchases or Cash Advances – Bankruptcy laws prohibit any recent credit purchases or cash advances from being discharged through bankruptcy. A credit purchase or cash advance debt will be considered non-dischargeable if (a) it exceeds $1,150, and (b) was accrued within 60 after filing bankruptcy.
Debts that are considered dischargeable are most credit card debt, medical debt, judgments, business debts, mortgage debt and auto debt. Although mortgage loan and auto loan debts are dischargeable, the property will be repossessed by the lender.
Christopher understands that financial hardships can affect honest, hard-working people. Growing up in a very blue collar family and rural area of Indiana , money didn’t always come easy for his parents. The struggles his family faced in his childhood made a significant impression on his business philosophy today. As a Fort Worth bankruptcy attorney this practice has given me the opportunity to directly impact the lives of many people. For more information please visit http://leebankruptcy.com