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4 debts you cannot discharge with bankruptcy

On Behalf of | Jan 12, 2022 | bankruptcy |

Debt can be overwhelming, especially if you have fallen on hard times. One of the tools consumers can use to get out of debt is bankruptcy. However, before taking this route, you attempt to find out if your debt can be discharged through the process.

As far as debt discharge is concerned, it is important to understand that bankruptcy cannot discharge some debts. Here are four debts that cannot be wiped out by bankruptcy.

Child and spousal support debts

Alimony and child support (commonly known as domestic support) obligations cannot be discharged by either Chapter 7 or Chapter 13 bankruptcies. Thus, you will be required to pay any missed child support or alimony obligations even after successfully filing for bankruptcy.

Student loans

Student loans are another set of debts that will not go away by simply filing for bankruptcy. However, there are options you can consider to have your student loan discharged. To do this, you must prove that you cannot pay back your loan due to undue hardship. You must also prove that your finances are not likely to improve for a significant portion of your loan repayment period.  This is extremely difficult.

Debts resulting from crime

While society believes in second chances, it is crucial to appreciate that bankruptcy cannot be used to forgive debts resulting from criminal activities such as larceny, embezzlement, fraud, malicious injury to person or destruction of property and personal injury caused by driving under influence. Also, debts that have intentionally been omitted in a prior bankruptcy application may not be forgiven.

Tax debts

Most tax debts too cannot be discharged through bankruptcy. However, income tax debts can be discharged after passing a certain period of time. For this to happen, certain conditions must be met.

Bankruptcy exists to give debtors the financial relief they need from burdensome debt. However, understanding which debts can and cannot be forgiven through this tool is important before deciding whether or not you should file for bankruptcy.  Even if a debt can’t be discharged it may be beneficial to file a Chapter 13 and obtain relief through the Chapter 13 payment plan.  Contact a bankruptcy attorney to discuss your options.