The Thing that Wouldn’t Leave. Non-dischargeable Debts in Bankruptcy


John_Belushi_HS_YearbookOne of my favorite old Saturday Night Live sketches was a preview of a mock-horror movie starring John Belushi as an unwanted house guest who was sticking around too long.   The name of the movie was The Thing That Wouldn’t Leave.

A Bankruptcy discharge is pretty comprehensive in its scope.  There are some debts, however, that won’t leave even though you have filed for Chapter 7.

Whether bankruptcy is the right financial remedy for your battle with debt depends on a number of factors. A major factor to consider is the nature of your debt. Not all debts are dischargeable through bankruptcy.

Section 523 of the Bankruptcy Code lists the debts that debtors cannot discharge through bankruptcy. Examples of such debts include the following:

  •  Certain taxes
  •  Child support or alimony
  •  Debts owed to a spouse or child related to divorce or separation
  •  Attorney fees owed for custody or support issues
  •  Government-imposed fines and penalties
  •  Most student loans.  There may be a hardship discharge if you have become disabled after incurring the loan.
  •  Personal injury awards resulting from driving under the influence
  •  Debts owed to certain tax-advantaged retirement plans
  •  Condominium or cooperative housing fees
  •  Court fines and penalties
  •  Court-ordered restitution in criminal cases
  •  Debts to which a creditor successfully objects and the court deems not dischargeable

When the majority of your debt is a student loan, bankruptcy is often not a viable solution. However, sometimes bankruptcy can enable you to discharge enough other debt that you are able continue paying your student loan. Therefore, it may be the best remedy despite the fact that you cannot discharge the student loan.

When debt is overwhelming, speak with an attorney and get a professional opinion.


Topics:  Chapter 7, Consumer Bankruptcy, Debt

Published In: Bankruptcy Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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