Not All Debts Can Be Discharged in Bankruptcy

Below is information from your Dayton bankruptcy attorney explaining that not all debts can be discharged in bankruptcy:

Debts that can be discharged (meaning they are forgiven, and debtor is not legally obligated to repay the debt) vary under each chapter of the Bankruptcy Code. Section 523(a) of the Code excepts some categories of debts from the discharge.  This means that even after a successful discharge in bankruptcy the debtor is legally obligated to repay those debts after bankruptcy.

Congress decided that some types of debts are not dischargeable for public policy reasons, either because the debt was incurred by improper behavior of the debtor, like drunken driving, or failure to disclose information in the bankruptcy, or other types of fraud, or because of the nature of the debt.

The exceptions to discharge apply automatically if the language prescribed by section 523(a) of the bankruptcy code applies.  Section 523 (a) lists 19 different categories of non-dischargable debt. The most common types of nondischargeable debts are some types of tax claims, debts not set forth by the debtor on the lists and schedules the debtor must file with the court, debts for spousal or child support or alimony, debts for willful and malicious injuries to person or property, debts to governmental units for fines and penalties, debts for most government funded or guaranteed educational loans or benefit overpayments, debts for personal injury caused by the debtor’s operation of a motor vehicle while intoxicated, debts owed to certain tax-advantaged retirement plans, and debts for certain condominium or cooperative housing fees.

The types of debts described in sections 523(a)(2), (4), and (6) (obligations affected by fraud or maliciousness) are not automatically excepted from discharge. Creditors must affirmatively request the court to determine whether or not those debts are excepted from the debtor’s discharge. In the absence of an affirmative request by the creditor and the granting of the request by the court, the types of debts set out in sections 523(a)(2), (4), and (6) are discharged.

Sometimes it is prudent to file a Chapter 13 bankruptcy rather than a Chapter 7 bankruptcy, because more types of debts can be discharged in a chapter 13 case than in a chapter 7 case. Examples of debts dischargeable in a chapter 13, but not in chapter 7, include debts for willful and malicious injury to property, debts incurred to pay non-dischargeable tax obligations, and debts arising from property settlements in divorce or separation proceedings.

To learn more about bankruptcy, or to discuss your personal financial situation with an experienced Dayton bankruptcy attorney contact Helen Wallace at Helen Wallace, Attorney at Law today by clicking on the preceding link, by e-mail to hw@helenwallacelaw.com or by telephone to (937) 654-6800.

The contents contained in Helen Wallace, Attorney at Law’s Blog and Web Page(s) are for educational and informational purposes only, and shall not be construed as legal or tax advice. The reading of Helen Wallace, Attorney at Law’s Blog or Webpage does not create an attorney/client relationship with Helen Wallace, Attorney at Law. Please consult an Attorney in your jurisdiction (where you live or where the legal action arose) if you are seeking legal advice or representation. Please further be advised that Helen Wallace, Attorney at Law is a debt relief agency and helps people file for bankruptcy relief under the United States Bankruptcy Code.

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