Not All Debts Are Eliminated In A Chapter 7 Bankruptcy Case

Filing for Chapter 7 bankruptcy can provide significant relief from overwhelming debt, but not all debts are discharged in the process. Certain obligations remain, and it’s important to understand these exceptions to manage expectations and plan accordingly.

Domestic Support Obligations

Child Support and Alimony: These obligations are not dischargeable under Chapter 7 bankruptcy. Debtors must continue paying any past due and ongoing amounts as required by law.

Certain Taxes

Recent Tax Debts: Federal, state, and local taxes that are recent (typically less than three years old) are not dischargeable. Fraudulent Tax Returns: Taxes for which the debtor filed a fraudulent return or engaged in tax evasion are also not dischargeable.

Debts for Willful and Malicious Injuries

Intentional Harm: Debts arising from willful and malicious injury to another person or property are not discharged.

Debts from Personal Injury or Death Caused by DUI

DUI-Related Claims: Any debt for personal injury or death caused by driving under the influence of drugs or alcohol is not dischargeable.

Student Loans

Hardship Exception: Generally, student loans are not dischargeable unless the debtor can prove that repaying the loans would cause undue hardship. This is a difficult standard to meet and often requires a separate legal proceeding within the bankruptcy case.

Debts Not Listed in the Bankruptcy Petition

Omission of Debts: Debts that are not listed in the bankruptcy schedules and for which the creditor did not have notice or actual knowledge of the bankruptcy case are typically not discharged.

Fines and Penalties Owed to Government Agencies

Government Fines: Fines, penalties, and restitution owed to government agencies are generally not dischargeable.

Certain Condo or Cooperative Housing Fees

HOA Fees: Fees or assessments that become due after filing for bankruptcy are not discharged.

Debts for Luxury Goods or Services

Recent Purchases: Debts incurred for luxury goods or services worth more than a specified amount within 90 days before filing are presumed to be non-dischargeable.

Loans or Cash Advances

Recent Cash Advances: Cash advances of more than a specified amount taken within 70 days before filing are presumed non-dischargeable.

Understanding these exceptions helps debtors prepare for the outcomes of filing for Chapter 7 bankruptcy and consider alternative solutions for managing non-dischargeable debts. Consulting with a bankruptcy attorney can provide guidance and help navigate these complexities.