What Are Nondischargeable Debts in Bankruptcy?
If you are thinking about filing for Chapter 7 bankruptcy in order to discharge your debts and to get a fresh start financially, it is extremely important to understand that all debt is not automatically discharged when you file for consumer bankruptcy. To be sure, certain types of debts are known as nondischargeable debts under the U.S. Bankruptcy Code. The Cornell Legal Information Institute (LII) defines nondischargeable debts as those that “cannot be wiped out in bankruptcy, such as alimony, child support, and most income tax debts.”
We will provide you with more information about the types of debts that typically cannot be discharged in a Chapter 7 bankruptcy case, and information about how a debtor will need to manage these debts after bankruptcy.
Learning More About Nondischargeable Debts
In general, there are two primary ways that a bankruptcy court will not discharge your debts if you file for Chapter 7 bankruptcy. First, the court can decide against a discharge if you do not properly follow the rules of the bankruptcy filing, which could include leaving out relevant information or engaging in fraud when you file all necessary bankruptcy paperwork. Second, the court will not discharge debts that are nondischargeable debts.
What kinds of debts are nondischargeable? As we answer this question, we want to highlight that there are 19 different debt categories, and it is important to understand whether your debts are eligible for discharge. The following are types of debts that typically are classified as nondischargeable:
- Unscheduled debts: these are any debts that you fail to list on your bankruptcy petition. If you do not provide the court with all relevant information about a debt, it cannot be discharged.
- Family support debts: if you owe debt for alimony, child support, or any other type of family maintenance, it is strictly nondischargeable in a bankruptcy case.
- Government fines or penalties: most types of fines or penalties that you owe a government agency are classified as nondischargeable debt and cannot be eradicated in a Chapter 7 bankruptcy case.
- Court fines or penalties: when you are required to pay court fines or penalties, including as part of a sentence, you cannot discharge this debt through bankruptcy.
- Personal injury debt: if you owe money to another party because you caused their injuries, these debts may classified as nondischargeable. Specifically, debts arising from personal injury cases are generally dischargeable, although they will not be if the injuries were caused by willful or wanton conduct, such as driving under the influence.
- HOA fees: you can discharge homeowners’ association (HOA) fees; however, if the debtor is keeping the home in a chapter 7 bankruptcy, they will need to pay any monies owed to the HOA..
- Certain tax debt: you cannot discharge a federal tax lien, and any tax debt that is recent (from the last three years) is nondischargeable in a Chapter 7 bankruptcy.
What Happens to Nondischargeable Debt After Bankruptcy?
If all (or almost all) of your debt is nondischargeable, you may want to reconsider whether bankruptcy is right for you. You may also want to look at the possibility of filing a chapter 13 as more options may be available in a chapter 13 vs. a chapter 7.
If you move forward with your Chapter 7 bankruptcy case but have some nondischargeable debt, you will still owe that debt once you have received a discharge for your other debts. Accordingly, you will need to pay any nondischargeable debt once your bankruptcy case is completed.
Contact a Florida Bankruptcy Lawyer
If you have questions about discharging debt in bankruptcy, an Orlando bankruptcy attorney can assist you. Contact Anderson & Ferrin to learn more about the services we provide to consumers in the Orlando area.