Many people have a limited understanding of bankruptcy law because it isn’t something that is normally dealt with very often and people don’t really talk about it if it happens to them. It is also a highly complex area of law that has a lot of finance jargon and lawyer speak in it, which makes it intimidating for many people. Many people who contemplate and go through bankruptcy proceedings are embarrassed by their situation. Don’t be! Don’t be scared, intimidated or embarrassed. Bankruptcy proceedings are often the legal remedy you need to discharge your financial burdens so that you can have a fresh start. It is your chance to rehabilitate your financial situation.
One of the first things that it is important to understand about bankruptcy is that while bankruptcy discharges many types of debts, there are several types of debts that can never be discharged through bankruptcy. This means that even if you were to go through a bankruptcy proceeding, these non dischargeable debts would still be your responsibility to repay after everything was said and done. Additionally, certain debts can be turned into nondischargeable debts by creditors.
Debts That are Never Dischargeable
There are a number of different categories of nondischargeable debts in Chapter 7 and Chapter 13 bankruptcy and the full listing of these nondischargeable debts can be found in 11 U.S.C. Section 523. The nondischargeable debts most frequently encountered in bankruptcy proceedings for individuals include:
- Student loan debts.
- Child and/or spousal support obligations or payments that are in arrears.
- Certain tax obligations to the state and federal government and tax liens.
- Unscheduled debts.
- Fines or penalties owed to a government entity.
- Debts that are fraudulently obtained.
- Debts associated with a judgement for personal injury or wrongful death suits against you resulting from a driving while under the influence conviction.
- Debts owed for malicious or willful injuries you have caused.
- Court fines and penalties.
- Criminal fines and penalties.
Debts That Can Be Made Nondischargeable By Objections Made By Creditors
Certain debts that do not fall into one of the statutorily defined nondischargeable debt categories under 11 U.S.C. Section 523 can be made into nondischargeable debts if the creditor who holds
the debt objects to the debt’s dischargeability. Under Rule 4007 of the Federal Rules of Bankruptcy Procedure, a creditor can ask the court, by filing motions and participating in a hearing, to evaluate whether a debt it holds is nondischargeable by your bankruptcy proceeding. But only certain debts can be made nondischargeable by this method.
The debt holder may also file a claim to obtain a determination concerning a debt’s dischargeability under Rule 4007(a).
What Happens to Nondischargeable Debts After Bankruptcy?
Certain nondischargeable debts are given priority over others. This means that priority debts must be repaid first, before other debts are repaid. For a Chapter 13 bankruptcy, your priority non dischargeable debts become an integral part of your repayment plan, and must be paid in full before your bankruptcy discharge can be received.