If you are considering filing for Chapter 7 bankruptcy, it is crucial to understand that you may not be able to wipe clean all your debts. While this form of bankruptcy could provide significant relief, certain obligations remain your responsibility even after completing the process.
Below are the types of debts that are non-dischargeable under Chapter 7 bankruptcy.
Student loans
One of the most common non-dischargeable debts is student loans. Whether federal or private, these educational debts usually stick with you unless you can prove “undue hardship.”
This is a high bar to clear and typically requires demonstrating that:
- You cannot afford basic necessities if you’re required to repay the loan
- Your financial struggles might continue for most of the loan’s repayment term
- You’ve genuinely tried to keep up with your loan payments in the past
Given these criteria, it may be rare to discharge student loans in bankruptcy.
Tax debts and government obligations
Certain tax debts, particularly recent ones, may be non-dischargeable. Generally, you may not be able to discharge income taxes under three years old, taxes for which you have not filed a return or taxes you have willfully evaded.
Other government debts, such as fines or penalties owed to government agencies, may survive bankruptcy.
Family support obligations
Child support, alimony or other domestic support may not be dischargeable with bankruptcy. The law may prioritize the well-being of dependents and ex-spouses, making these obligations non-dischargeable.
Other non-dischargeable debts
Several other types of debts may typically not be dischargeable in Chapter 7 bankruptcy. These may include:
- Debts obtained through fraud or false pretenses
- Debts for willful and malicious injury to another person or property
- Certain condominium or cooperative housing fees
- Debts from driving while intoxicated
Understanding these exceptions may be crucial when considering bankruptcy. While Chapter 7 could provide a fresh start, it may not be a cure-all for every financial obligation. Before proceeding, consider seeking legal advice. An attorney could assess your situation and guide you through the process.