Filing bankruptcy can give you a clean slate financially. If your income qualifies you for Chapter 7 bankruptcy, you will likely be able to discharge most of your personal debts in your case. If you file Chapter 13 bankruptcy, you may be able to have certain debts discharged after repaying others in a manner that you can afford.
No matter which chapter of bankruptcy you file, though, it will not eliminate every debt you have. Certain debts are non-dischargeable, and it is important to know what these are.
Understanding what debts bankruptcy cannot discharge
Under federal law, there are 19 different types of debt that are ineligible for discharge in Chapter 7 bankruptcy. Some of these debts may be dischargeable if you file Chapter 13 bankruptcy. Yet, others will remain no matter which chapter of bankruptcy you file.
Among the debts that neither Chapter 7 bankruptcy nor Chapter 13 bankruptcy will discharge include:
- Certain tax debts
- Child support and alimony payments
- Debts stemming from the injury or death of another person while operating a motor vehicle under the influence
- Debts stemming from the willful and malicious injury of another person
- Debts you failed to list when filing bankruptcy
- Fines or penalties incurred from violating the law
Debts that are difficult to discharge in bankruptcy
Certain debts are difficult – though not entirely impossible – to discharge in bankruptcy. Among these debts are your student loans. To qualify for a partial or full discharge, you must prove that repaying them would place an undue hardship on you. Yet, the threshold for proving this is high, and you will have to file a separate lawsuit within your bankruptcy case for the court to even consider it.
You may also be able to have certain income tax debts discharged as part of your bankruptcy case. While most tax debts do not qualify for discharge, it is possible yours could if they have been outstanding for more than three years.
Filing bankruptcy will help you discharge many of your debts. Yet, no matter which chapter you file, certain debts will remain. An attorney can help you understand how your non-dischargeable debts will impact your case and your financial future.