Chapter 7: What Debts Can Never Be Discharged?

One of the first questions individuals considering filing usually have is what will be discharged. This can be a complicated determination for both Chapter 7 and Chapter 13 filings, but you may have concerns about what will happen to ongoing debts like unpaid taxes or burdensome student loans. In many cases, neither of these are discharged in bankruptcy. The bankruptcy laws do not allow all taxes to be discharged, but you may be able to discharge some old taxes.

While some student loans potentially can be discharged due to grounds of hardship, it is a difficult and nearly impossible battle to win. Family support obligations such as court ordered child support and alimony are not eligible for discharge. Money owed regarding legal consequences for criminal offenses like a DUI or other similar issues likewise are not dischargeable. You also may not be eligible for discharge if you have had a prior bankruptcy discharge in recent years.

If you are considering filing for bankruptcy, chances are this is not a decision you are taking lightly, but it may have become necessary as your debt has continued to accrue—along with your stress levels—for some time. It is critical to protect your financial health, but also your physical and emotional health, as all can be affected during times of financial trouble due to staying up late at night worrying, answering calls from debt collectors, dealing with restrictions on your budget, worrying about how others may perceive your struggles, and more. The key is to get back on track, to lead a productive, fruitful lifestyle, and to do so you must consult with a bankruptcy attorney as soon as possible to examine all your options.

It is also critical to understand that some credit card charges may not be discharged in bankruptcy either, primarily for charges or cash advances incurred right before you filed. These rules are in place to discourage fraud and the temptation for consumers to rush out and max out all their credit cards directly before filing—knowing they would have no intention of paying. So, if you are planning on filing for bankruptcy and want to see credit card debt discharged, do not make any charges (basically limit any activity on these accounts!) 90 days before filing a bankruptcy case. Pre-planning is in your best interest—especially if you have property or assets that must be protected.

If a creditor claims you have committed any sort of fraud or wrongdoing against them, they may file a lawsuit in the bankruptcy court requesting that the debt you owe to that creditor not be discharged. This type of litigation may be highly disputed and ultimately is decided by the bankruptcy judge. You also can lose your right to a discharge if the bankruptcy judge determines you have committed fraud concerning your bankruptcy paperwork or testimony, such as failure to disclose all income and assets or lying to the Trustee or the court. Therefore, it is very important to be as truthful and honest as possible in preparing and filing your bankruptcy papers with the court and concerning any testimony you give to the bankruptcy court.

You probably have many questions about bankruptcy, including which type of bankruptcy will work best for you,  how much you will have to sacrifice (very little in many cases), and whether you will have to go to court. Speak with a skilled bankruptcy attorney from the offices of H. Lehman Franklin, P.C. Call now to learn more at 912-764-9616, or contact us online.