Every year, hundreds of thousands of Americans are provided a new financial beginning by wiping out all or the majority of their debts. However, even in bankruptcy, there are certain debts that cannot be erased and you will continue to owe these obligations until they are satisfied.
The federal bankruptcy code outlines 19 different types of debts that cannot be wiped clean. Some of these debts are extremely rare and will not apply to your case. However, some of these debts are common and may present a hurdle in your bankruptcy proceeding.
The Government has decided that some debts are so important that a person will always be obligated to pay them. For instance, child support arrears are almost always a non-dischargeable debt. Society recognizes that providing for one’s child and caring for them is paramount, and parents cannot skirt this responsibility by declaring bankruptcy. Accordingly, debts for past-due child support cannot be erased. Similarly, obligations to pay alimony or debts owed pursuant to a Judgment or Order of divorce also cannot be wiped out in bankruptcy.
Additionally, most types of tax debts cannot be discharged in bankruptcy. Since the federal government makes the bankruptcy laws, the federal government has the ability to make sure that the debts owed to it are paid. There are exceptions for very old tax debts, but in general, the federal government is not willing to allow debtors who owe back taxes to avoid their obligations by filing for bankruptcy. Likewise, fines and penalties owed to government agencies are also not dischargeable.
One of the biggest sources of debt that most people have comes from student loans. Unfortunately for debtors, student loans are almost always non-dischargeable debts. While student loans can occasionally be discharged when the borrow suffers a severe disability, it is very difficult to meet the criteria to have a student loan discharged in bankruptcy. Most debtors will need to continue paying their student loans long after their bankruptcy cases end.
Additionally, debts related to criminal actions are also not dischargeable. If a person owes criminal fines, court costs, or restitution as a result of an arrest, he or she will still be responsible for paying these fines. There is also a specific exception in the bankruptcy code which prohibits people who owe personal injury judgments due to driving under the influence from discharging that debt.
Finally, and logically, only debts that are actually listed on the bankruptcy petition can be discharged. If a person forgets to include a debt in the bankruptcy petition, that debt cannot be discharged. For that reason, it is important to work with an experienced bankruptcy attorney who will be sure to include all types of application, dischargeable debts.
Due to the varying types of bankruptcy options available to you and the fact that federal courts strictly enforce the bankruptcy rules, you need the help of an experienced debtor rights attorney—like those at Fitzgerald Campbell—if you are considering filing for bankruptcy or have already done so. Our attorneys have decades of experience representing clients in bankruptcy and all other types of debtor defense cases, and we are here to help you!