The 7 Debts You "Can’t Discharge in Bankruptcy,

and How You Can Discharge Many of Them Anyway 

The normal reason for contesting bankruptcy is that you listed one of the seven debts from section 11 United States Code 523 of the bankruptcy code that are supposed to be non dischargeable in bankruptcy.

     1. Child Support and Alimony can be repaid in Chapter 13 bankruptcy and property settlements can be discharged but child support, alimony and property settlements cannot be discharged in a Chapter 7.  Child support to a person cant be discharged but to an agency it can be discharged if all of the disposable income is paid over 5 years. 

     2. Taxes over 2 years old are dischargeable in bankruptcy! Taxes must be 3 years old, you must have filed returns at least 2 years ago, no assessments within 240 days, you can avoid liens on homes in bankruptcy for the amounts over the unprotected equity in the home, there must be no fraud involved, and any offer in compromise or bankruptcy will increase time periods.  In a Chapter 13 bankruptcy taxes may be paid back for a small percentage and penalties and interest waived. 

     3. Federally Guaranteed Student Loans Bankruptcy changed October 1998 and 2005.  Bankruptcy now only allows hardship discharges the Bankruptcy court considers 3 factors.   

       a. Whether you made good faith efforts to repay    (not      required if you never had the money)

       b. Your ability to repay now and in the immediate future

       c. Whether it creates hardship to your family if you repay 

You also normally need to file for the Ford loan program prior to filing to be considered for a hardship

     4.  Debts due to theft or fraud. Are dischargeable in a Chapter 13.   Only relied on, proven, material and intentional financial  misrepresentations are fraud in a Chapter 7.   If banks make bad loans or failed to check facts it does not make debts non-dischargeable in bankruptcy.   The lender has a hard burden to prove fraud.  However, a charge or cash advance over $1,000 or purchases over $1,000 for luxury items within 60 days before filing are assumed fraudulent so timing and amounts are important. 

     5. Criminal Acts and Intentional Injuries are non dischargeable in bankruptcy.  However, if injured parties fail to file an adversary proceeding it is discharged in bankruptcy anyway.   Bankruptcy won't stop criminal courts from ordering criminal restitution.  Bankruptcy is only a defense in Civil Court.

     6. Drunken Driving Accidents.   You can get your license back if you get a discharge in bankruptcy.  Drunk driving accident victims must file adversary actions in bankruptcy court and prove drunk driving or chance being forever barred from collecting and you get your license back.  (Learn how in the bankruptcy manual)

     7. Marital Property Settlement Agreements to pay a debt.   Filing a Chapter 13 normally eliminates your obligation to pay the marital property settlement listing a marital property settlement in a Chapter 7 won't.       

If you have these debts, list them anyway there are ways to bankrupt many of them anyway contact your attorney.

The Bankruptcy Manual fully discusses how to bankrupt debts which many people and attorneys think are not bankruptable.   There are exceptions to almost every rule.   Download your free copy.

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