While bankruptcy can provide a fresh financial start, not all debts can be wiped clean. Understanding which debts survive bankruptcy is crucial for anyone considering this option. Here’s a comprehensive guide to non-dischargeable debts in bankruptcy proceedings.
Student Loans
Student loans, both federal and private, are generally non-dischargeable in bankruptcy. The only exception is if you can prove “undue hardship” through the Brunner test, which requires demonstrating:
– You cannot maintain a minimal standard of living while repaying the loan
– Your financial situation is likely to persist for a significant portion of the repayment period
– You have made good-faith efforts to repay the loan
Tax Debts
Most recent tax debts cannot be discharged in bankruptcy. However, some income tax debts may be eligible for discharge if they meet specific criteria:
– The taxes are at least three years old from the date they were due
– You filed your tax returns at least two years before filing for bankruptcy
– The tax assessment is at least 240 days old
– You did not commit tax fraud or willful tax evasion
Child Support and Alimony
Domestic support obligations, including child support and alimony, are never dischargeable in bankruptcy. This includes:
– Current and past-due child support payments
– All forms of spousal support or alimony
– Associated legal fees and court costs
– Any other obligations related to domestic support
Criminal Restitution and Court-Ordered Penalties
Debts arising from criminal activities or court orders cannot be discharged, including:
– Criminal fines and penalties
– Restitution ordered as part of a criminal sentence
– Civil court penalties and sanctions
– Traffic tickets and other government fines
Recent Luxury Purchases and Cash Advances
Certain recent credit card charges are presumed non-dischargeable:
– Luxury goods or services worth more than $725 purchased within 90 days of filing
– Cash advances totaling more than $1,000 taken within 70 days of filing
– These presumptions can be overcome, but the burden of proof lies with the debtor
Debts Obtained Through Fraud
Any debt incurred through fraudulent means cannot be discharged, including:
– Debts obtained through false pretenses or misrepresentation
– Fraudulent financial statements used to obtain credit
– Debts for willful and malicious injury to another person or property
– Embezzlement or larceny-related debts
Homeowner Association Fees
Fees that become due after filing for bankruptcy cannot be discharged, including:
– Regular HOA dues and assessments
– Special assessments
– Related late fees and penalties
Conclusion
Understanding which debts cannot be discharged in bankruptcy is essential for making informed financial decisions. While bankruptcy can provide relief from many types of debt, these non-dischargeable obligations will remain your responsibility even after the bankruptcy process is complete.
For specific advice about your situation, it’s crucial to consult with a qualified bankruptcy attorney who can evaluate your particular circumstances and provide personalized guidance.
*Disclaimer: This article is for informational purposes only and does not constitute legal advice. Laws and regulations regarding bankruptcy may vary by jurisdiction and can change over time. Always consult a legal professional when before making legal decisions.