Although a bankruptcy discharge will cover a lot of an average consumers’ debt, there are some debts that are not subject to discharge.
Student loans. Student loans have long been an exception to bankruptcy discharge. There is a step you can take after discharge, called an adversary proceeding, to determine whether your student loans are an undue hardship and should be dischargeable, but this is an extra step and may be an extra cost.
Priority Taxes. More recent tax debt will not be included in a bankruptcy discharge. If your tax debt is older and meets other criteria, it may be subject to discharge though. If you are in a chapter 13 case, your priority tax debt will need to be paid off during the plan. In a chapter 7 case, priority taxes are your responsibility after discharge.
Criminal Liability/Restitution. Generally speaking, debts for willful and malicious injury by the debtor to another cannot be discharged. Also, debts from personal injury or death due to intoxication, while operating a motor vehicle cannot be discharged. Restitution generally is not dischargeable in bankruptcy either.
Debts Incurred Through Fraud. If any of your creditors have an adversary proceeding and win during your bankruptcy for exception to discharge due to fraud, that debt will not be included. Keep in mind, sometimes an adversary proceeding is not needed and the exception is automatic.
Domestic Support Obligations. Child support and alimony payments are not discharged in a chapter 7 or chapter 13 bankruptcy case. Some forms of property settlements from a divorce may be discharge in a chapter 13 though. During a chapter 13 bankruptcy, domestic support obligations need to stay current and arrears need to be caught up through the bankruptcy plan.
Keep in mind these are broader categories and this list is not exclusive. Speak with a knowledgeable attorney if you have any questions about your bankruptcy discharge.
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