Filing for bankruptcy can provide relief from overwhelming debt, but not all debts disappear. Some financial obligations remain even after a successful bankruptcy case. Understanding which debts are non-dischargeable helps you plan for your financial future.
Student loans
Most student loans do not qualify for discharge in bankruptcy. Courts require proof of “undue hardship” to consider eliminating these debts. This means showing that repaying the loan would cause severe financial distress for you and your dependents. Even then, discharges are rare.
Child support and alimony
Bankruptcy does not erase family-related financial obligations. Child support and alimony payments remain your responsibility regardless of the type of bankruptcy filed. Courts prioritize these debts to ensure financial support continues for dependents.
Certain tax debts
Some tax obligations, including recent income taxes, payroll taxes, and fraud-related tax debts, remain non-dischargeable. However, older income tax debts may be eliminated under specific conditions, such as meeting a waiting period and filing requirements.
Criminal fines and restitution
If you owe fines, penalties, or restitution related to a criminal conviction, bankruptcy will not help. Courts consider these obligations a matter of public interest, ensuring that they remain payable even after financial hardship.
Debts from fraud or willful misconduct
If a court finds that you incurred debt through fraud or intentional wrongdoing, it will not be discharged. This includes debts from false financial statements, credit card fraud, or intentional damage to property.
HOA fees and court judgments
Unpaid homeowner association (HOA) fees remain if you keep the property. Additionally, the courts will not discharge judgments from personal injury cases related to drunk driving.
Planning for financial recovery
Even though the courts will not discharge some debts, bankruptcy can still provide relief by eliminating other obligations. This allows you to focus on managing the remaining debts more effectively.
