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What Debts are not Discharged in Bankruptcy?

Posted on in Bankruptcy

Not every type of debt will be discharged in a Chapter 7 or Chapter 13 bankruptcy filing. The Bankruptcy Code sets aside some debts that Congress decided cannot be discharged due to public policy reasons.

Those debts include debts that are set aside by other legal proceedings, like spousal or child support, debts coming from the debtor causing injury while driving intoxicated, or a “willful and malicious” harm done to another person or property.” These kinds of debts are usually not discharged because they were incurred due to the debtor's improper behavior.

In addition, most debts owed to some cooperative housing or condominium fees are not eligible for discharge. And the government wants to make sure that any money owed to it will be paid. Tax debts are usually not discharged, as well as any fines due to a government agency.

There are differences in the dischargable debts in Chapter 7 and Chapter 13 bankruptcy. In Chapter 13, a debtor is allowed to discharge debts due to willful and malicious harm to person and property, debts from property settlements arising from a divorce or separation, and debts incurred to pay tax settlement obligations.

For a debtor filing Chapter 13 bankruptcy, is is possible to get a “hardship discharge,” when the debtor can prove to the court's satisfaction that paying the debt would cause him or her a hardship to pay the debt back. This happens when due to circumstances beyond the debtor's control, such as a debilitating sickness, prevent the debtor from securing a job to help pay the debts.

Bankruptcy laws are complex and can be difficult to understand without a background in law. Contact a Lake County bankruptcy attorney today to ensure that you receive all of the benefits to which you are entitled under the law.

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