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Do It Yourself Bankruptcy: Non-Dischargeable Debts

The main point of a bankruptcy, at least from the debtor’s viewpoint, is to get a discharge of her debts.  Most debts are dischargeable, but some are not.  We’ve already talked about how taxes, except in certain cases, are nondischargeable.  There are other debts that simply won’t go away in a bankruptcy.  It’s important to know whether a debt can be discharged because, if the majority of debts are nondischargeable you might want to think twice about whether to file in the first place.

Besides taxes, the main nondischargeable debts are these:

  • Domestic support obligations such as child support and alimony
  • Debts that are in the nature of domestic support obligations.  These include property settlement agreements incurred in divorce, such as where the husband is ordered to pay certain debts.  Before 2005, these types of debts were dischargeable but BAPCPA removed them from the dischargeable category
  • Debts incurred by fraud
  • Debts that exceed $650 for luxury items that were incurred less than 90 days prior to filing
  • Student loans made or guaranteed by a governmental unit or under a program funded by a governmental unit, unless the loan repayment would impose an undue hardship on the debtor
  • For damages for death or personal injury caused by the debtor while intoxicated or under the influence of drugs

The first two categories are debts that automatically pass through bankruptcy.  In order for debts incurred by fraud, debts that exceed $650 for luxury items or damages caused while under the influence to be nondischargeable the creditor has to file an adversary proceeding, which is a lawsuit within the bankruptcy, to establish that the debts meet the criteria for nondischargeability.  For student loans, the debtor must file an adversary proceeding to show undue hardship.

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