The discharging of debt is one of the major benefits of chapter 7 bankruptcy. When people decide to file for bankruptcy, having their debt discharged is often one of the primary motivators. However, there are certain types of debts that cannot be discharged. These non-dischargeable debts in bankruptcy may impact how your case proceeds and what life is like for you after discharge. Here, we examine non-dischargeable debts in bankruptcy in greater detail, so you know what to expect when facing a complex bankruptcy case.
Consistent Non-Dischargeable Debts in Bankruptcy
As Investopedia details, some debts are always non-dischargeable. These are debts that – regardless of other circumstances – are assumed to be ineligible for discharge and do not require a court hearing to determine that. Some consistently non-dischargeable debts in bankruptcy include:
- Spousal support
- Child support
- Court or attorney fees associated with any form of domestic debt, such as child support or alimony
- Government fines or penalties owed
- Court fines or penalties owed
- Debts owed to a family member – such as a child or former spouse – if the debts arose because of divorce or separation
- Student loan debt
- Restitution owed for personal injury caused by the debtor
- Certain kinds of taxes
Additionally, any debt that is not scheduled – or disclosed by the debtor during their initial bankruptcy filing – is not eligible for discharge in chapter 7. Chapter 13 bankruptcy may allow for the discharge of these debts if the bankruptcy agreement is reworked, but the goal of chapter 13 is generally not to have debts discharged in general.
Situationally Non-Dischargeable Debts in Bankruptcy
There are some types of debts that become non-dischargeable debts in bankruptcy if the creditor successfully objects to having them discharged. These debts include, but are not limited to the following:
- Purchases of luxury goods, amounting to more than $675. Creditors will be asked to present facts in court to show that these purchases meet these qualifications and were made within 90 days of the debtor filing for bankruptcy. If the creditor fails to prove these – or the opposite is successfully argued by the debtor’s legal representative – the debt may be eligible for discharge.
- Money obtained as a cash advance within 70 days of the bankruptcy filing date and amounting to more than $950. However, if the debtor can prove that they had the intention of paying the advance back, it can become eligible for discharge.
- Any debts that were created under false pretense or fraud.
- Any debts that are incurred through malicious actions or intent against another person. Again, this must be proven by creditors or other outside entities, and if this isn’t done, the debts may still be eligible for discharge.
How Else Can Debt Become Ineligible for Discharge?
Wondering how debts may be determined to be ineligible for discharge outside of these very specific guidelines? Unfortunately, there are several ways that bankruptcy debt may become non-dischargeable, meaning that they are determined ineligible for discharge or that discharge is denied. Some reasons for denial of debt discharge include:
- Failure to provide requested tax documentation
- Failure to comply with requirements to take financial instruction or guidance courses
- Proof of a transfer of assets or property to hide them from creditors
- Proof of destruction of books or records that might be relevant to the bankruptcy case
- Proof of perjury related to the bankruptcy case
- Proof of any kind of fraudulent behavior related to the bankruptcy case
- Inability to account for assets that have been lost
- Violation of a court order
Additionally, you may not be eligible for discharge of your debt if you have previously filed for bankruptcy and successfully received a discharge in that case within a certain time frame related to your current case. In plain words, if you’ve already gotten relief of your debts recently, you are not eligible for another discharge for several years.
There are several other barriers to having your debt discharged. These are more general rules that are usually avoidable if you follow the direction of the courts and your legal counsel. The primary obstacle to discharge is usually denial of discharge that comes from a debtor’s failure to follow the procedures put forth by the court. When this happens, the court may even decide to withhold discharge altogether, meaning that if your debt would otherwise be eligible for discharge, your chapter 7 petition will still be denied. Therefore, it is critically important to follow the rules of your bankruptcy filing and rely on the advice of an experienced bankruptcy lawyer.
How to Ensure your Debt Won’t Be Deemed Non-Dischargeable
The fear that your debt will be deemed non-dischargeable debt in bankruptcy can be very frightening for some people. However, there are simple ways to ensure that all of your eligible debt is discharged. The best way to do so is to follow every rule put forth by the court. You may not want to share every detail of your financial failure with others, or you may not be very happy about the idea of attending financial counseling as part of your agreement. However, following the directions and rules put forward by the court and recommended by your legal counsel is crucial for getting the result you’re hoping for.
Getting the right professional legal help will also help you make the right choices during your bankruptcy case to secure a discharge of your debt. However, finding a bankruptcy lawyer in your area that can offer you that advice and guidance can be difficult. That’s where My341 can help you. With our attorney directory and experience rating tool, you can find the legal assistance you need, based on your location, your provider’s experience, and your individual needs. With the right legal guidance, you can overcome many of the challenges that could prevent your debts from being dischargeable and get the result you’re hoping for at the close of your bankruptcy case.
Don’t attempt to navigate your bankruptcy case alone. Contact us here at My341 and let us help you find the right legal assistance for you. Your debt discharge – and peace of mind – will be in good hands!