The discharge of debts is central to bankruptcy. So you need to know when you don’t get a discharge at all or don’t discharge certain debts.
Last time we described bankruptcy discharge as the legal, permanent elimination of debts. Today we talk about the exceptions to this most important of consumer bankruptcy benefits.
The Exceptions to Discharge
There are two broad types of exceptions to discharge.
First, there are rare situations which could result in no discharge of ANY of your debts.
Second, there are much more common situations in which just a PARTICULAR debt is not discharged.
Rare Lack of Any Discharge
Actions that are effectively a fraud on the bankruptcy court could jeopardize one’s right to a discharge of debts. These bad actions include hiding assets from the bankruptcy trustee, destroying or selling such assets, hiding or destroying financial or business records, lying under oath, and disobeying a bankruptcy court order. See Section 727(a) of the U.S. Bankruptcy Code.
You can also lose your right to a discharge by filing a bankruptcy too soon after a prior one. See Section 727(a)(8) and (9) and Section 1328(f). This applies only if you got a discharge of debts in that prior bankruptcy case. So if you filed a case and it was dismissed without a discharge, you can file and get a discharge.
Types of Debts Specifically Not Discharged
Section 523 of the Bankruptcy Code lists a series of “exceptions to discharge.” These are debts which are either never discharged or are not discharged under certain circumstances.
- most recent taxes, and some older taxes
- debts that were incurred through fraud or misrepresentation against the creditor, including certain recent cash advances and credit card purchases
- debts which were not listed on your bankruptcy schedules on time
- money owed because of alleged embezzlement, larceny, or through other kinds of theft or fraud in a fiduciary (trust) relationship
- child and spousal support
- non-support obligations to an ex-spouse (except under Chapter 13)
- claims against you for intentional injury to another person or their property
- most but not all student loans
- claims against you for allegedly causing injury or death to someone by driving while intoxicated
If you behave honestly in preparing and going through your bankruptcy case, you’ll very likely get a discharge of debts. You do need to treat the process seriously, and be thorough and responsible.
You may still have a specific debt or two that won’t get discharged because of the nature of that debt.
So see an experienced bankruptcy lawyer to get advice about your personal situation. Find out how to discharge your debts and get a fresh financial start.