If you’re thinking about filing bankruptcy, you may have learned that certain debts are nondischargeable. If so, you’ve likely begun to wonder if your most pressing debts are dischargeable.
This list is a guideline for what kinds of common debts are nondischargeable in bankruptcy. Keep in mind that there may be exceptions in the cases listed below and that there are other cases in which a debt may be declared nondischargeable. Only an experienced bankruptcy attorney can truly help you determine whether your debts can be discharged.
If you would like to get an idea of what debts are nondischargeable before you decide to declare bankruptcy, here’s a list of the 9 most common nondischargeable debts:
1. Alimony and Child Support
The most common debts that people ask if they can discharge are alimony and child support debts. These are often the most overwhelming causes of debt for people, so it’s disappointing to find out that they are not dischargeable. There is some good news, however. If you go with a Chapter 13 Bankruptcy, there are provisions that allow you an extended period of time to pay off nondischargeable debts such as child support arrears and alimony.
2. Debts from Credit Obtained under Fraudulent Means
If you gained an asset, money, credit refinancing, or the like under fraudulent means, any debt that you’ve incurred related to it is nondischargeable. Fraudulent means may include lying on a document, deceit, or actual fraud.
3. Debts Owed due to Criminal Actions or Lawsuits
Certain criminal actions may lead you to owe money for damages, and that money owed may turn into debt. Nondischargeable debts in this category include damages and restitution payments owed for:
- Committing embezzlement or larceny
- Intentionally causing property damage or injury
- Causing injuries or death while operating a vehicle under the influence of drugs or alcohol
- Fraud committed at a banking institution or credit union
- Committing fraud, manipulation, or deceit when purchasing stocks, bonds, or other securities
4. Taxes Owed to the Federal and State Government
Certain IRS and State Taxes may not be dischargeable in your Bankruptcy. If you failed to file your tax return in a timely manner, the debt will not be discharged. Any taxes assessed within the three years prior to the filing of your bankruptcy may also be nondischargeable.
5. Fines Owed to the Government
If you owe fines (such as for tickets) or penalties to the government, these don’t generally count as dischargeable debts. However, you may be granted an exception for tax penalties.
6. Payments Owed to a Pension or Profit-Sharing System
When you opt into a profit-sharing system such as a 401 (K), your payments are often taken directly from your paycheck; however, this is not always the case. Since profit-sharing plans and pensions are investments, any back payments owed to these systems won’t count as dischargeable debt.
7. Student Loans
Debts owed on student loans may be nondischargeable. There are exceptions, however, so you shouldn’t automatically assume that you can’t get these discharged.
8. Debts Not Listed before Bankruptcy Proceedings
It is vitally important that you take great care to list all of your debts before the bankruptcy proceedings begin. You can’t go back and tack on a debt that you forgot after the proceedings are over, which means that you may still be overwhelmed with one of your looming debts after declaring bankruptcy. And if you decide that you’ll just declare bankruptcy on that debt later, you’ll have to wait 2-8 years.
9. Debts before Previous Bankruptcy Proceeding
If you list a debt in a bankruptcy proceeding but waive the right to declare bankruptcy on it, you can’t decide to declare bankruptcy on that debt later. Similarly, if the court denied your request for bankruptcy on a debt, you can’t get it discharged later.
If you still need help deciding whether or not bankruptcy is right for you, contact Ted Machi & Associates for a free consultation. Attorney Daniel Wright has over 16 years of experience with bankruptcy cases and will offer you honest and compassionate advice regarding your debts.