I am sorry you are experiencing overwhelming debt of any kind. Having overwhelming debt is stressful on anyone. Many Roseville, MN residents, when faced with crippling debt rightly turn to a Chapter 7 Bankruptcy to get their lives back and solve the problem once and for all. The goal of any Chapter 7 Bankruptcy is to get your life back. Technically speaking, we are looking for your debts to be “discharged” under section 727 of the Bankruptcy Code. A discharge of the debts means your liability for those debts is gone and the creditor cannot collect on those debts ever again.
Upon discharge, the reduction of stress is incredible. The once overwhelming situation is now under control permanently. But, some debts our Roseville MN Bankruptcy Lawyers can't help you discharg in bankruptcy. Non-dischargeable debts in bankruptcy survive the bankruptcy discharge so that you are still personally liable for the debts even after being granted a discharge.
1) TAXES
The general rule is taxes are not dischargeable in a Chapter 7 Bankruptcy. While there are exceptions to this general rule, the general rule is taxes are not dischargeable in a Chapter 7 Bankruptcy case under Section 523(a)(1) of the Bankruptcy Code. It does not matter if you are filing bankruptcy in Roseville, St Cloud or Brainerd, Minnesota, the general rule is taxes are not dischargeable in bankruptcy. The taxing authority does not need to object to the discharge of taxes, they are by law, not dischargeable.
2) FINANCING INCURRED BY FRAUD OF FALSE REPRESENTATIONS
Section 523(a)(2) of the Bankruptcy Code states that money received by fraud or false representations are not dischargeable in bankruptcy. Say, for example, you filled out a credit card application and you stated your income at $100,000.00 per year when your income was really $25,000.00 per year.
Another example would be if you actively used your credit card knowing that you would be filing bankruptcy in the end anyway. If you were using the credit card without the intent to repay, and the creditor can prove it to the court, these debts may be held not dischargeable in your bankruptcy case. If a creditor does not object, the debt is discharged. Since the burden usually rests with the creditor to prove intent, these cases are rare and difficult for a Roseville Bankruptcy Lawyer to prove. There are statutory presumptions of fraud in certain instances. In that case, the debtor has the burden of overcoming the presumption of fraud.
3) AN UNLISTED DEBT
If you fail to list a creditor, the debt to the creditor may be held not discharged. This is why it is important to list all of your creditors in your bankruptcy case. The theory of this rule is quite obvious. If the creditor had no notice of your bankruptcy case, and could not participate in the bankruptcy case, either by objections and/or filing a proof of claim to share in the bankruptcy distributions, if any, they have been damaged, and therefore their debt remains valid against the debtor.
Bankruptcy Code Section 523(a)(3) codifies this rule. If the bankruptcy case was a no asset, ie no distribution case, creditors can be added forever (as long as the debt was incurred pre-petition of course). If, however, the bankruptcy case did have assets that were distributed, those unlisted creditors cannot be later added to the debtor’s bankruptcy case.This is why, as a debtor’s attorney, we stress to the debtors, that we must list all your creditors on the bankruptcy case. At our law firm, our Roseville Bankruptcy Lawyers pull credit reports for our clients and merge that information into the schedules.
4) DEBT INCURRED THROUGH FRAUD OR DEFALCATION WHILE ACTING IN A FIDUCIARY CAPACITY, EMBEZZLEMENT, OR LARCENY
These are all really fancy words for theft. If you take, for your own, property that belongs to someone else, and which has been entrusted to you, and take that property and use as your own, the creditor can object to you discharging it in your bankruptcy case. If the creditor says nothing, and does not object within your bankruptcy case, the debt is discharged. The creditor must first object to you discharging the debt and obtain a court order stating the debt is excepted from discharge for the underlying debt to be not discharged in the bankruptcy case.
5) DOMESTIC SUPPORT OBLIGATIONS
Bankruptcy Code Section 523(a)(5) excepts from discharge, domestic support obligations. Generally, the code defines a “domestic support obligation” under Bankruptcy Code Section 101(14A) as child support or alimony-maintenance. If you owe back child support or back alimony, or if you have an ongoing obligation for child support or alimony, these obligations are not dischargeable in the bankruptcy case. No creditor has to object, these debts are not dischargeable by operation of law. The social policy behind many of these exceptions to discharge is quite obvious. Here, imagine a world in which we let obligors discharge alimony and child support in bankruptcy? Why even bother getting a court order for support if you could discharge it in bankruptcy. The very fabricate of society would come apart if we allowed mothers and fathers to walk away from the obligations to their children and each other.
6) WILLFUL OR MALICIOUS INJURY BY THE DEBTOR TO ANOTHER PERSON OR PROPERTY
Bankruptcy Code Section 523(a)(6) excludes from discharge debts incurred by a debtor who intentionally causes willful or malicious injury to another person or another person’s property. Here, the creditor must bring an objection to discharging the underlying debt or the debt is discharged in bankruptcy. What are some examples of this? Debtor throws acid in ex-girlfriends face intending that it permanently disfigure girlfriend’s face. You point the gun at someone’s head and intend to kill them and do.
7) FINES PAYABLE TO THE GOVERNMENT
Criminal fines are not dischargeable in a bankruptcy by operation of law. No one has to object, the debt/fine is not dischargeable in bankruptcy. So, if you end up with a DWI fine, don’t plan on filing a bankruptcy to get rid of the fine because that will not be possible.
8) STUDENT LOANS
Ah yes, the student loans. The general rule is student loans are not dischargeable in a bankruptcy proceeding. There is one tiny little glimmer of light for those who wish to discharge their student loans in bankruptcy. Bankruptcy Code Section 523(a)(8), states that while student loans are not dischargeable they are dischargeable if the debtor can prove to the court that repayment of the student loan(s) would cause debtor “undue hardship”. The case law is all over the board is to what would justify the court ordering that the repayment of the student loan debt causes undue hardship and is therefore, not excepted from discharge.
The problem is, debtor must sue the student loan company in the bankruptcy case. Do you think the student loan companies and their armies of attorneys easily give up and let you discharge the student loans or do you think they fight you tooth and nail? You guessed right, they will normally fight you tooth and nail. So, debtors, who are broke to begin with, now have to pony up large retainers for lawyers to sue the student loan companies. The lawyers who take these cases know this will be a major battle so the retainer fees are usually set quite high too. And then, if debtor loses the case, they are not only out large sums of attorney fees, they also still owe the student loan debt. Talk about taking a big gamble! It’s a gamble that most debtors chose not to take.
That does not stop some attorneys from advertising in such a way as to offer debtors a glimmer of hope, that really is not a glimmer, it’s a real small sliver of hope. They advertise to give some this glimmer of hope to try and lasso debtor into a discussion about the veracity of filing a Chapter 13 Bankruptcy which will stop collection on student loans for up to five years. Then, why not say that in the first place? The sad reality is there little room to move in the student loan debt arena and bankruptcy. Debtor’s only real choice in bankruptcy is to file a bankruptcy for up to five years and set a Chapter 13 Bankruptcy debtor can afford without fear of being garnished while in the Chapter 13 Bankruptcy. We urge students to call their Senators and Congress people to demand immediate and meaningful student loan debt relief.
9) DEATH OR INJURY CAUSED BY DEBTOR’S OPERATION OF A VEHICLE UNDER THE INFLUENCE OF DRUGS, ALCOHOL, OR ANOTHER SUBSTANCE
Here again, someone must object first to the discharge of the underlying debt, or the debt is discharged in bankruptcy. Injuring or killing someone in accident caused by a debtor who is drunk may likely end up with a large judgment against the debtor which will not be dischargeable in a bankruptcy case. Yet another reason why drinking and driving is a bad idea.
10) RESTITUTION
Bankruptcy Code Section 523(a)(13) states that restitution is not dischargeable in a bankruptcy case. If you have been a victim of a crime, you want the judge to rule all damages in the form of restitution that is not dischargeable in a bankruptcy case. The victim of the crime would not have to object to the discharge of the debt- it is not dischargeable by operation of law.
11) DEBTS OWED TO A AN EX-SPOUSE IN A DIVORCE DECREE
Bankruptcy Code Section 523(a)(15) excepts from discharge debts owed to an ex-spouse as part of a settlement or order in a divorce decree. So, if debtor owes ex-spouse a property settlement, or agrees to indemnify ex-spouse on the payment of debt, that obligation is not dischargeable in bankruptcy. Again, the ex-spouse need not object to the discharge of the debt, it is not dischargeable by operation of law. Note this would be a different result had the debtor filed a chapter 13 bankruptcy instead of a chapter 7 bankruptcy.
12) HOME OWNERS ASSOCIATION DUES
It’s weird but true. These associations must have a lot of lobbyists in Congress, because Bankruptcy Code Section 523(a)(16) prohibits the discharge of home owners association dues as long as debtor has a legal, equitable, or possessory interest in the property. So, you can go ahead and move out of the condo and file bankruptcy, but you remain personally liable for all home owners association dues that come due until debtor no longer has a legal, equitable, or possessory interest in the property. Again, no objection is necessary, the dues are not dischargeable by operation of the law.
CONCLUSION
Look through the list above and one thing becomes apparent. The social policy in most of these exceptions to discharge are important to the fabricate of our society. Letting child support obligors discharge child support obligations in bankruptcy would leave us in a world in which mothers and fathers would raise children themselves in abject poverty. Letting criminals discharge fines and restitution would leave victims further victimized and criminals unpunished. Even taxes one can understand. After all, if you could discharge taxes easily in bankruptcy, who would pay them but only the very rich?
Some of them though- you have to scratch your head and ask why? Home owners association dues? Where is the social policy underpinning excepting these dues from discharge? Ask the home owners association dues lobby. Debt incurred through fraud, embezzlement, and misrepresentations, yes, that makes sense in a smooth functioning society. But, what about student loans? Why should the big banks and schools get paid when student gets left holding the bag. Who between the three is less financially sophisticated? Who amongst the three can take the financial hit more easily? Who amongst the three makes representations about what school can do for them and what kind of placement rates they have?
I think we sell our children short and leave them holding the bag- I think it is disgraceful what we have done to many of our children who simply wanted a better education and believed what they were being told by the schools. If the social policy is to protect the big banks and schools, our Congressmen and Congresswomen are doing a great job. If the social policy is to get a great education but not enslave our children, we have miserably failed our children.
