When debtors file for Chapter 7 or Chapter 13 bankruptcy, the primary goal is to get their debts discharged. As soon as the bankruptcy court discharges debts in a bankruptcy case, the filer is no longer to be held liable for them. Most consumer debts like credit card debt and medical bills can be discharged. However, there are certain debts that are inherently non-dischargeable. This means that these cannot be wiped out by the bankruptcy process. This non-dischargeable debt has been decided by Congress citing reasons of public policy.
Categories of Non-Dischargeable Debt
There are categories of non-dischargeable debt under which obligations may be taken into account. If your financial obligations fall under any of these categories, you are deemed accountable for them and your creditors can still collect even if you got a bankruptcy discharge. There are non-dischargeable debts that aren’t subject to a hearing, but there are others that can be discharged if the creditor does not counter the intent to discharge them.
Dischargeable Debts in Extraordinary Circumstances
There are exemptions to discharge debts under extraordinary circumstances provided that you have proof to back them up since, as a rule, they are non-dischargeable.
- Debts not included in your bankruptcy petition unless your creditor is aware of your filing.
- Spousal or child support debts or alimony
- Attorney fees in child custody and support cases
- Student loans.
- Certain condominium debts or cooperative housing fees (such as homeowners association fees)
- Debts incurred to pay non-dischargeable state and/or federal tax debt
- Certain tax-advantaged retirement plans debts
- Government penalties and fines.
- Personal injury or death caused by the debtor’s operation of a motor vehicle, vessel, or aircraft while intoxicated
- Most fines, penalties, forfeitures, or criminal restitution
Debts not Dischargeable if the Creditor Objects
In chapter 7 cases, the debtor does not have an absolute right to a discharge. An objection to the debtor’s discharge may be filed by a creditor, by the trustee in the case, or by the U.S. trustee. A bankruptcy court hearing is in order when non-dischargeable debts that you are including for discharge are contested by creditors. Presentation of arguments from you and the creditor will be allowed to back your respective claims. If the creditors do not raise any objection or issue or if they do but the court doesn’t allow it, these debts are discharged.
- Credit card purchases for luxury goods
- Cash advances
- Debts obtained by fraud or false pretenses
- Debts incurred due to willful and malicious injury
Denial of a Debtor’s Discharge
There are cases where in the bankruptcy court denies a Chapter 7 discharge because the debtor failed to comply with the rules and regulations. Following are some examples:
- Perjury and other fraudulent acts
- Failure to provide requested tax documents
- Failure to complete a course on personal financial management
- Failure to satisfactorily explain a loss of assets
- Destruction or concealment of records or
- Transfer or concealment of property with the intent to hinder, delay, or defraud creditors
- Court order violations
If you have committed any of the above, your debts may not be discharged even if they would have been dischargeable under the bankruptcy law. Your creditors, the bankruptcy trustee, or the U.S. Trustee can contest your discharge although the final decision is still up to the bankruptcy court.
There are higher chances for denial of discharge if you repeatedly file for bankruptcy within a short period of time. When it comes to successive bankruptcy filings involving different bankruptcy chapters, the order of the filings dictates the length of time the filer has to wait in order to receive a discharge in the second filing. The court will deny a discharge in a later chapter 7 case if the debtor received a discharge under chapter 7 or chapter 11 in a case filed within eight years before the second petition is filed. With successive Chapter 13 (reorganization) cases, the filer cannot get a discharge if the second case is filed within two years of the first case’s filing.
If the first case is filed under bankruptcy chapter 13, the debtor generally cannot file under Chapter 7 and obtain a discharge within six years of the first case’s filing date. If the first filing is under Chapter 7 with a discharge granted, the filer cannot receive another discharge in a Chapter 13 filing within four years of the first bankruptcy filing.
Planning to file for bankruptcy in Kentucky? Let us help you get that fresh start!
While declaring bankruptcy and bankruptcy filing may be done by any person without a bankruptcy lawyer, you will be responsible for fully understanding everything related to the law. We at Farmer & Wright Law are experienced in the field of bankruptcy cases. If you want to know how to file for bankruptcy but you are not sure of what bankruptcy case to avail or maybe you’re worried about whether or not your debts are dischargeable, our bankruptcy attorneys can help you. We may be able to answer such questions for you including bankruptcy exemptions, debt settlement, insolvencies, mortgage payments, debt management, and many more. Call us now for free legal advice.