What Debts Are Not Discharged in Bankruptcy?

Deciding to file for bankruptcy is a difficult and emotional choice for most people. It often comes after years of struggling with debt that feels impossible to manage. If you’re exploring this option, you’re likely wondering how much relief bankruptcy can offer and whether it will free you from your financial burdens. While bankruptcy can eliminate many types of debt, it’s not a universal solution. Some obligations remain even after filing.

At Whitten & Whitten, we’ve spent years helping clients understand their debt relief options, including bankruptcy. Below, we break down what it means for a debt to be discharged and provide insight into the types of debts that typically cannot be discharged. We’re here to help you make an informed decision that’s best for your financial future.

What Does It Mean to Discharge Debt in Bankruptcy?

When a debt is discharged in bankruptcy, the debtor is no longer legally responsible for repaying it. Creditors can no longer contact or pursue collections from the individual, offering a fresh financial start. However, not all debts qualify for discharge. Federal bankruptcy laws are designed to balance the relief provided to debtors with the rights of creditors, meaning that certain debts are exempt from discharge to ensure repayment in specific circumstances. Understanding which debts qualify for discharge is essential when deciding whether bankruptcy is the right solution for your situation.

Debts That Cannot Be Discharged in Bankruptcy

While bankruptcy provides relief from many types of debt, some obligations are excluded by law. Below is a list of debts that are typically not discharged:

1. Student Loans

• Student loans are one of the most common debts that cannot be discharged in bankruptcy. While there are rare exceptions, borrowers must prove “undue hardship” in a separate court proceeding—a high burden of proof that’s difficult to meet.  

2. Child Support and Alimony

• Family obligations such as child support and spousal maintenance payments are prioritized by law. Bankruptcy cannot eliminate or reduce these payments, ensuring these responsibilities continue even after filing.

3. Certain Tax Debts

• Some tax obligations, including income taxes that are less than three years old or taxes owed due to tax fraud, are not dischargeable. Older tax debts may be eligible for discharge under specific circumstances, but navigating these exceptions can be complex.

4. Court-Ordered Fines and Penalties

• Any fines or penalties a court issues, such as criminal restitution, cannot be discharged in bankruptcy. This includes penalties for violating laws or court orders.

5. Debts Arising From Fraud or Illegal Behavior

• Debts obtained through fraudulent actions, false pretenses, or illegal activities are exempt from discharge. For example, if you incurred debt through misrepresentation on a loan application, that debt won’t be erased.

6. Unpaid HOA Fees

• Homeowners’ association fees that accrue after filing for bankruptcy remain your responsibility. If you’re a property owner with significant HOA fees, discuss this area with your attorney to evaluate your options.

7. Personal Injury Claims Arising From Drunk Driving

• Any damages or debts resulting from a DUI-related accident are not discharged. Courts ensure that the victims of such incidents are compensated despite the debtor’s bankruptcy status.

8. Student Grant-Back Obligations

• Certain funds tied to service obligations, including government grants or specialized scholarships, may not be discharged if you fail to meet service requirements.

The Importance of Consulting a Bankruptcy Lawyer

A bankruptcy lawyer can be instrumental in helping you navigate debts that may seem non-dischargeable at first glance. While some debts might require repayment, a skilled lawyer will thoroughly analyze your financial situation to identify opportunities for relief you may not have considered. They’ll determine which debts can be discharged and strategize the best way to handle those that can’t, ensuring no detail is missed. With their experience, they can guide you through options like Chapter 7 or Chapter 13 bankruptcy and work to maximize the relief available to you, giving you the best chance to reduce your financial burdens while staying compliant with the law.

Take Charge of Your Financial Future Today

Filing for bankruptcy can be tough, but it can also mark the start of a brighter financial future. While not all debts are erased, bankruptcy can provide significant relief and a much-needed reset.

If you’re struggling to determine the best way forward, the experienced team at Whitten & Whitten is here to help. With decades of experience navigating bankruptcy cases, we’re ready to partner with you to achieve the financial freedom you deserve. Contact us today – together, we’ll create a plan to reclaim control of your finances.