Bankruptcy can give you a fresh start, but it doesn’t liquidate everything. There are some debts that even bankruptcy can’t forgive. These are known as nondischargeable debts. Read on to learn what debts are nondischargeable, and when there are exceptions.
Student Loans
Student loans are rarely forgiven, be they federal student loans, school loans, or private lender student loans. However, if the debtor can prove that they are unable to pay, and will be unable to ever pay off their loans due to “undue hardship” (normally disability), the court might discharge the loan. There will be an additional fee if you do apply for “undue hardship,” and courts rarely grant it.
Taxes
Most of the time, taxes are nondischargeable debts. Trust fund taxes and income taxes less than three years old can never be discharged, nor can any taxation debt incurred due to evasion or fraud. However, if you have personal taxes older than three years old, they might be dischargeable.
Secured Debts
Debts tied to an item such as a car or valuable jewelry will not be liquidated, instead, you will be required to surrender the object, or pay off the lender. Bankruptcy cannot stop repossession, even if it does eliminate some debts.
Child Support
While debts incurred during divorce due to property distribution are normally discharged (unless it will cause great hardship on the spouse), alimony and child support are not. These are known as “domestic support obligations.”
Driving Under the Influence
Most of the time, if a debt is given as a punishment, it will not be discharged during bankruptcy, so any debt incurred by injuring yourself or others when driving under the influence cannot be discharged. Unfortunately, this includes driving boats and planes as well as cars.
Previous Debts From Other Bankruptcies
If you have filed for bankruptcy in the past, any debts that were denied discharge then will be denied discharge again. This is done to dissuade people from attempting to file for multiple bankruptcies.
Noncompliance
If for any reason you refuse to provide necessary documents (whether you willfully hide them or accidentally do so), or disobey court orders, the judge can refuse to discharge your debts due to noncompliance.
Debts You Do Not List
If for any reason, you do not list a debt in your bankruptcy papers, the bankruptcy case will not discharge them. While it is difficult to do, you must include all of your creditors on your mailing matrix, or you may be accused of perjury.