Filing bankruptcy is often described as a “fresh financial start,” and that’s mostly true – but not every debt is treated the same way.
When your bankruptcy case is finalized, you receive a discharge, relieving you of the remaining debt you owe to certain creditors. While this sounds like a good thing, not all debts can be removed by filing Chapter 7 bankruptcy.
Non-dischargeable debts in bankruptcy
Non-dischargeable debts can’t be removed by filing bankruptcy. If a debt is not discharged, you must still pay it.
One of the reasons Congress made debts non-dischargeable in bankruptcy is public policy. In other words, it would unfairly damage the public’s interests to allow certain debts to be automatically discharged through bankruptcy proceedings. The debts include things like:
- Condo fees
- Student loans
- Child support
- HOA fees
- Debts from retirement loans
- Current taxes
Any debts resulting from malicious intent, personal injury claims, larceny or embezzlement also cannot be discharged in bankruptcy proceedings.
Creditors can also challenge a discharge if they believe they have a case. This is done by showing the individual who filed for bankruptcy purchased some luxury item within 90 days of filing for bankruptcy or otherwise abused the bankruptcy process. While such challenges are rare, it’s important that you understand that the possibility does exist so that you know not to take on any unnecessary debts right before you file.
Protecting your rights when filing bankruptcy
When filing for bankruptcy, it is important to know what debts can and cannot be discharged. Understanding your rights is an important part of this process. Experienced legal guidance can help your bankruptcy case go smoothly.