Debt is part of everyday life. Many people however find themselves in situations where the debt is so overwhelming that they have to file for bankruptcy. According to the constitution, you can always get a fresh start through reorganization as provided in Chapter 13 or liquidation as provided by Chapter 7. In both of these cases, the bankruptcy court has the power to discharge certain debts to ensure that the creditor doesn’t take measures against the debtor such as seizing collateral and so forth. However, there are cases where some debts cannot be discharged.
Debts That Aren’t Discharged In Bankruptcy
While the objective of both Chapters 7 and 13 is to provide people with a fresh start unencumbered by their past debts, there are a few debts that cannot be discharged. These will include:
- Child support and alimony. This will also include the attorney’s fees for the same.
- Taxes that haven’t been paid yet such as tax liens. In some cases, however, when the taxes date back several years, some of the federal, state, and local taxes can be discharged.
- Debts that were left off the bankruptcy petition.
- Penalties and fines that are owed to government agencies
- Debts that arose from willful and malicious injuries to properties or people.
- Cooperative or condo housing fee debts.
- Criminal restitution, penalties and fines imposed by the courts
- Student loans. Although notoriously difficult to discharge in a bankruptcy court, student loans can be discharged if there is evidence of undue hardship on the individual or their dependants.
Can A Discharge Be Denied?
Although these discharges come as a great relief to the debtor, there are cases whereby the debts cannot be discharged. One such reason is when a debtor doesn’t comply with the rules and procedures provided in both Chapters 7 and 13. A judge can also deny a discharge if the individual or company files for bankruptcy too often between a certain period of time. In such a case, the court will view it as a habitual thing and deny the petition. Additionally, your creditors have a say in discharging certain debts. They may oppose to the discharge, but ultimately the court has the final say.
Want to learn more? Call us and let us help you understand bankruptcy laws and the types of debt you have.