What Types of Debts Are Not Dischargeable
It is important that you, or a loved one, know what types of debts are not dischargeable. This can be very important if you have recently filed for bankruptcy and are trying to improve your credit scores.
Chapter 7 bankruptcy may seem like an easy option. You can qualify and be debt-free in a matter of weeks. It’s not easy, as it is with most things. It is hard to get a Chapter 7 bankruptcy. However, even those who are eligible face the challenge of a long list of debts that cannot be discharged under Chapter 7.
What Is Non-Dischargeable Debt?
Non-dischargeable obligations are financial obligations that the courts won’t usually eliminate even if they create a financial burden for debtors. These bills will remain your responsibility even after a bankruptcy filing is completed.
Nondischargeable Debt Explained
Other debts are not dischargeable if they are incurred based on fraudulent acts. This is only the case if the creditor objects. Some of these debts are incurred due to a divorce or marital settlement, while others may result from fraudulent acts, willful or malicious acts against another person or their property, and those resulting from embezzlement or larceny.
Ways Nondischargeable Debts Are Determined
Some non-dischargeable obligations are classified as such because they can be the result of misconduct by the debtor. This category can also include omissions or errors. Unscheduled debts (debts not included in the bankruptcy petition) may not be dischargeable. However, this rule is not always applicable, especially if creditors were aware of the bankruptcy filing but took no action.
Other types of non-dischargeable debts include payments for personal injuries caused by the debtor while driving under the influence. The debtor can challenge any charges the creditor wants to have excluded through bankruptcy. If the court upholds these objections, those debts become non-dischargeable.
Credit card purchases for luxury goods made within 90 days after filing for bankruptcy and owed to a single creditor are included. The court will permit the discharge of the debt if the debtor can prove an intention to repay the creditor or if the purchase was not a luxury item. Cash advances exceeding a certain amount and received within 70 calendar days of filing for bankruptcy may also be considered non-dischargeable.
Under Chapter 7, the court can declare certain debts non-dischargeable in additional situations, such as when the debtor intentionally destroys records or transfers property to hide it from creditors.
In some cases, a debtor may have filed for bankruptcy before and had their debts discharged. However, in the latest bankruptcy, their debts may not be dischargeable depending on the type and timeframe of the bankruptcy.
9 Debts That Are Always Non-Dischargeable in Chapter 7 Bankruptcy:
- Any debt that you don’t include in your bankruptcy petition: You must create a schedule listing all creditors and the amounts they owe each. Failure to include a creditor in bankruptcy will result in the debt not being discharged.
- Student Loans: You will still be responsible for student loans with a few exceptions. Sometimes, it’s possible to show that repayment of the loans would result in an “undue hardship”. This exception requires you to go through a separate process for the forgiveness of student loan debt.
- Secured Debts: Chapter 13 offers a better solution for secured debts because it gives you the opportunity to pay off late balances and modify the loan. You can also give back the asset. You may be eligible to have the remaining debt discharged by bankruptcy proceedings.
- Alimony, child support, and attorney fees for child custody.
- Loans for retirement accounts.
- Delinquent tax debts.
- Fees for association fees, such as condo fees, cooperative housing bills, and HOA.
- Penalties and fines owed to the government.
- Restitution for criminal acts: This category of debt includes financial obligations that are incurred due to a willful or malicious act against another person or their property. DUI-related damage is also exempted from the law.
3 Debts That Could Remain If the Creditor Obstructs
- Debts that result from a marital agreement or divorce.
- Cash advance loans: A single creditor may provide a cash advance of more than $1,000 within seven days after filing bankruptcy. The creditor may challenge the dismissal.
- Fraud-related debts: These include large purchases made before you file bankruptcy and which you have no intention of repaying. Large purchases are defined as having more than $725 in charges from one creditor within the first 90 days after filing bankruptcy. Falsifying credit application information can be fraud, giving the creditor grounds for challenging the discharge.
Creditors who want to challenge your discharge of debts need to present their case in an adversary proceeding. If this happens, you will need to prove that you intend to repay the debt. If the court rules in favor of creditors, you will still be responsible for the debts.
Courts can deny bankruptcy petitions for non-dischargeable creditors. If you don’t follow the procedures and give the required information by the deadlines, in addition to nondischargeable debts, you will need to file for bankruptcy. You may lose your ability to discharge any debts if you fail to comply with these requirements.
Work With an Experienced Bankruptcy Attorney Today!
If you are in need of professional help with a bankruptcy case, call Tenina Law today. We will work to sell your assets and repay your debts in a timely manner, so you can get back to a fresh start today.