Whereas Chapter 7 bankruptcy is seen as a way of ridding oneself of excessive debt, there are several debts not covered by Chapter 7 bankruptcy.
The U.S. Bankruptcy Code (U.S.C. Title 11) lists 19 types of non-dischargeable debts based upon the nature and procurement of the debt. In most cases, these debts are outright non-dischargeable. Consequently, at the conclusion of the bankruptcy case, creditors may continue with collection efforts. Additionally, in some cases, creditors may challenge the discharge of their particular debt.
Non-dischargeable Debts
Unless the debtor demonstrates extraordinary circumstances, debts that are always non-dischargeable include:
- Unscheduled debts/debts not listed on the bankruptcy petition
- Some taxes
- Spousal or child support
- Attorney fees in support and child custody cases
- Debts owed to a former spouse/child due to divorce
- Fines, penalties, and other government debts
- Student loans
- Personal injury debts arising from driving while intoxicated
- Some retirement plan debts
- Unpaid homeowners’ association fees
- Court fines and penalties such as restitution
Non-dischargeable Debts Following Creditor Objections
As previously mentioned, creditors may object to the discharge of certain debts. These debts include:
- Credit card purchases for luxury goods valued at over $650 and purchased within 90 days of filing bankruptcy
- Cash advances over $925 within 70 days of filing bankruptcy
- Debts resulting from fraud
- Debts arising from willful and malicious harm to another’s person or property
Denial of Discharge
In some cases, the court may outright deny a Chapter 7 discharge. Most cases of denial of discharge occur when the debtor does not adhere to court rules or fails to provide the required information. Even if a debt may be dischargeable, failing to fully cooperate may hinder discharge. Other reasons for denial include:
- Withholding tax documents
- Failing to attend a course on personal financial management, if ordered
- Transferring or hiding property
- Destroying financial records
- Committing perjury
- Failing to account for “lost” assets
- Violating a court order
- Filing a previous bankruptcy within particular time frames
For more information about Chapter 7 bankruptcy, please contact us.