Chapter 7 bankruptcy is well-known as a debt relief mechanism because it is so effective at relieving the debtor's financial burdens. Even so, there are certain types of debt that will remain after the debtor receives a Chapter 7 discharge.
This post will address the most common types of non-dischargeable debts.
Generally speaking, common types of non-dischargeable debts include:
- Domestic support obligations (past, present, and future alimony and child support payments)
- Many tax debts
- Student loans (unless the borrower can prove that payment of the loans would constitute an "undue hardship" to the borrower him/herself or his/her dependents)
- Government-ordered payments like fines, court fees, restitution and criminal penalties
- Debts deemed non-dischargeable in a prior bankruptcy filing, including those relating to the debtor's fraud
- Debts related to the debtor's fraud (whether non-dischargeable in a prior bankruptcy or not)
- Personal injury or wrongful death damages where the debtor was found to be driving while intoxicated
- Debts and funds due to pension plans
- Debts for "luxury goods and services" debts incurred within 90 days of the bankruptcy filing or cash advances taken 70 days prior to the filing of a Chapter 7 action
- Debts from embezzlement, larceny, or other willful and malicious acts
- Debts from a divorce property settlement agreement (if the filer has the ability to pay the debt, and the burden to the creditor is greater than the benefit to the debtor if the debt were to be discharged)