What Debts Can Be Discharged

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DISCHARGE

All debts are discharged in a Chapter 7 case unless they are excepted from discharge by section 523  of the Bankruptcy Code (11 U.S.C. §523).

The EXCEPTIONS TO DISCHARGE UNDER CHAPTER 7 are these:

  1. Most taxes. But if enough time has passed the tax debt may be discharged.  If a property tax has been owed for more than one year or you have an income tax debt more than three years old ask your lawyer if your tax debt can be discharged;
  2. Debts for money, property or related to the extension, renewal or refinancing if procured through false pretenses, false representations or a fraudulent financial statement; included are certain debts for luxury goods or services within 90 days before the bankruptcy was filed or some cash advances within 70 days before filing;
  3. Debts not listed or scheduled in a prior bankruptcy, if the failure to notify the creditor prevented the creditor from filing a claim or objecting to the discharge of the debt;
  4. Debts for fraud or embezzlement by a debtor in a position of trust;
  5. Most domestic support obligations (including alimony, spousal maintenance, family support, or child support);
  6. Debts for willful and malicious injury by the debtor;
  7. Fines, penalties or forfeitures owed to a government;
  8. Student loans and debts for educational benefits, unless repayment of the debt imposes an undue hardship on the debtor and debtor’s dependents;
  9. Debts for death or personal injury caused by the debtor’s use of a motor vehicle while intoxicated by alcohol, a drug or other intoxicant;
  10. Debts which were or could have been listed in a previous bankruptcy and which were not discharged, if the debtor waived or was denied discharge under §727(a)(2),(3),(4)(5),(6) or (7);
  11. Certain debts from a judgment or order or decree involving fraud or defalcation of a fiduciary involving a depository institution or insured credit union;
  12. Some debts for malicious or reckless failure to fulfill a commitment by the debtor to a federal depositary regulatory agency to maintain capital in an insured institution;
  13. Obligations for payment of orders of restitution in cases under Title 18 of U.S. Code, Crimes & Criminal Procedure;
  14. Incurred to pay a tax to a unit of government not dischargeable under #1, or to pay fines and penalties under federal election law;
  15. Property Settlements.  Debts owed to a spouse, ex-spouse or child arising in a divorce or separation (not including debts under #5) in connection with divorce decree, order, separation agreement or divorce decree;
  16. Association Fees.  Fees or assessments connected to membership associations related to the debtor’s interest in his or her dwelling if the fee arises after filing but while the debtor still has an ownership interest in property;
  17. Certain fees imposed on prisoners by a court for filing, motion, complaint or appeal and for costs and expenses assessed for such filings.
  18. Loans owed on certain pensions, profit sharing, stock bonus or related plans; and
  19. Certain debts arising from wrongful actions concerning a securities violation.

Most of the EXCEPTIONS TO DISCHARGE UNDER CHAPTER 13 are the same as those for a Chapter 7.  However, the Chapter 13 discharge is broader.  It permits the discharge of several debts not discharged in Chapter 7.  These debts can be discharged in a Chapter 13 case:

  1. Debts for willful and malicious injury to property;
  2. Marital property settlements (not including domestic support obligations such as alimony and chbild support;
  3. Debts from a prior chapter 7 case in which a discharge was denied;
  4. Restitution, if not convicted of a crime;
  5. Debts incurred to pay income taxes which cannot be discharged; and
  6. Some other – ASK US.

If the Plan modifies the rights of a creditor by providing for the curing of a default and the last payment is due after the final Plan payment, the debt is not discharged.  11 U.S.C. §1328(a)(1); §1322(b)(5).

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