Nondischargeable Debts

Child Support and Alimony

• These obligations, arising from divorce or separation agreements, are considered top priority debts. The reason these debts cannot be discharged in bankruptcy is to protect the financial stability of children and former spouses who rely on these payments for their support.
• Even if you file for bankruptcy, you will still be legally obligated to continue making these payments according to the court order. Failure to do so can result in serious consequences, such as wage garnishment, property liens, or even contempt of court charges.

Recent Tax Debts

• Tax debts incurred within the past three years are generally not eligible for discharge in bankruptcy. This includes any unpaid income taxes, property taxes, or sales taxes owed to federal, state, or local governments.
• Furthermore, any tax debt that arose due to fraudulent activities or intentional tax evasion will not be discharged, regardless of when it was incurred. The bankruptcy system aims to discourage individuals from using bankruptcy as a means to evade their tax obligations.

Student Loans

• Student loan debt is notoriously difficult to discharge in bankruptcy. This is because the government wants to ensure that borrowers take their loan obligations seriously and make every effort to repay them.
• However, in rare cases, it may be possible to obtain a discharge if you can demonstrate that repaying the loans would impose an “undue hardship” on you and your dependents. This typically requires proving that you are unable to maintain a minimal standard of living while making loan payments, that your financial situation is unlikely to improve in the future, and that you have made good faith efforts to repay the loans.

Government Fines and Penalties

• Fines and penalties imposed by the government as a form of punishment for violating laws or regulations are generally not dischargeable in bankruptcy. These can include traffic tickets, criminal fines, and restitution orders.
• The purpose of this exception is to uphold the integrity of the legal system and ensure that individuals are held accountable for their actions.

Debts from a Previous Bankruptcy

• If you filed for bankruptcy in the past and a particular debt was not discharged in that case, it will also not be dischargeable in a subsequent bankruptcy filing. This rule aims to prevent individuals from repeatedly using bankruptcy to avoid paying their debts.
• It is important to carefully consider the long-term implications before filing for bankruptcy multiple times, as it can significantly impact your creditworthiness and financial future.

DUI-Related Debts

• Debts arising from personal injury or property damage caused while driving under the influence (DUI) are typically not dischargeable in bankruptcy. This includes medical expenses, property repair costs, and any legal judgments against you.
• This exception reflects society’s strong stance against drunk driving and emphasizes the importance of personal responsibility for the consequences of such actions.

Secured Debts

• Secured debts are those backed by collateral, such as a car loan (where the car is the collateral) or a mortgage (where the house is the collateral). These debts are not automatically discharged in bankruptcy.
• You generally have two options when dealing with secured debts in bankruptcy:
  1. Reaffirm the debt: This means you agree to continue making payments on the debt and keep the collateral.
  2. Surrender the collateral: You give up the property securing the debt, and the creditor can then sell it to recover some or all of the debt owed.

Undisclosed Debts

• It’s crucial to provide complete and accurate information about all your debts when filing for bankruptcy. If you intentionally or unintentionally fail to list a debt on your bankruptcy schedules, the court will not discharge it.
• Furthermore, deliberately omitting debts can lead to serious consequences, such as accusations of bankruptcy fraud and potential criminal charges.