Bankruptcy is the legal process that allows consumers to remove some of their debt obligations. There are two types of personal bankruptcy: Chapter 7 and Chapter 13. A Chapter 7 bankruptcy will eliminate most debt and is a faster process. A Chapter 13 bankruptcy will restructure the debt you have now to create a payment plan lasting a few years. Within both of these is the possibility that debts will be discharged. A discharge of debt is essentially the elimination of the debt, where the consumer no longer needs to pay the debt. When a debt is discharged, the debtor has complete and permanent relief from that financial obligation. However, not every debt will be discharged in bankruptcy. It is important to understand which of your debts will be discharged, and which types of debts will remain after your bankruptcy.
Section 523(a) of the United States Bankruptcy Code clearly indicated that certain types of debts are not allowed to be discharged in a bankruptcy. In these cases, the debtor will still have the financial obligation to pay the debt, even after the bankruptcy is over. Some of the most common debts that are considered nondischargeable under bankruptcy law include the following:
- Child Support or Alimony
- Student loans
- Certain taxes
- Money owed to retirement plans
- Government agency debts (fines, penalties, etc.)
- Homeowners association fees
- Unscheduled debts (debts not listed in the bankruptcy)
- Debts owed for personal injuries due to a DUI
- Debts owed to a former spouse or child under a divorce decree
- Attorney fees for child support and custody
- Court fines or penalties
- Criminal restitution
Objections of Creditors
The law allows any creditor to petition the court to allow their debt to also be nondischargeable. This petition must be done proactively by the creditor. If a creditor fails to assert their claim, their debt will be discharged along with the other debt in bankruptcy. While most consumer debt will be discharged in bankruptcy, the following are some examples where the court would strongly consider not discharging a debt.
- Cash Advances. Taking a cash advance of $1,000 or more 70 days before bankruptcy is considered to be acting in bad faith with respect to the bankruptcy court.
- Fraudulent Debts. Debts incurred through fraud or actual misrepresentation. (Fraudulent or false credit card information, purchasing large items immediately before filing for bankruptcy, etc.)
- Willful and Malicious Injury. Any debt owed due to willfully and/or maliciously injuring another person or their property.
- Breach of Fiduciary Duty. Any kind of debt incurred from a breach of fiduciary duty, embezzlement or larceny, will not be dischargeable by a bankruptcy court.
Let Us Help You Today
The experienced Jupiter bankruptcy attorneys at the office of Julianne Frank, Esq. can help you with your bankruptcy case, and help you attempt to get as many debts as possible discharged from your bankruptcy. We can help you determine which type of bankruptcy is right for you, and help you with the entire bankruptcy process. Contact our legal team at (561) 220-2528 today.
11 U.S. Code § 523 - Exceptions to discharge