When you are navigating the bankruptcy process, it’s essential to understand the debts not dischargeable in bankruptcy. Here are just a sample of debts not dischargeable:
- Domestic Support Obligations: This includes child support and alimony. These debts are not dischargeable in bankruptcy and are priority debts.
- Other Divorce Obligations: Sometimes a spouse promises to do other things in a divorce decree (other than paying support). For example, some spouses promise in their divorce decree to pay “equalization payments” or other obligations. Any non-support obligations arising from a divorce decree are debts not dischargeable in a Chapter 7 bankruptcy. However, non-support divorce obligations may be dischargeable in a Chapter 13.
- Student Loans: Most student loans are not dischargeable in bankruptcy, unless you demonstrate undue hardship. This is a tough burden. The Department of Justice eased the requirements, but it still requires litigation in the bankruptcy. You will be unsuccessful without a competent Arizona bankruptcy lawyer.
- Unpaid Taxes: Most taxes are not dischargeable in bankruptcy. However, if your income taxes are more than three (3) years old, and you have filed your returns, then it may be possible to discharge them. It is a complicated analysis. Other tax debts (like unpaid withholding taxes, sales taxes/TPT taxes) are usually not dischargeable.
- Debts for Willful and Malicious Injury: If you intentionally cause harm to another person or their property, the resulting debts are not dischargeable. A typical example are debts resulting from a fight or trashing a rental property as retaliation for your eviction.
- Debts Resulting from Fraud: A debt you have no intention of repaying may not be dischargeable in bankruptcy. This might include credit card charges you incur shortly before filing bankruptcy.
- Debts for Breach of Fiduciary Duty or Embezzlement: Damages for breaching your fiduciary duty may not be dischargeable in bankruptcy. If you commit embezzlement or theft (even if there was no crime), that may be a non dischargeable debt.
- Debts Not Properly Listed: If you fail to disclose a debt in your bankruptcy, it may not be discharged, unless you had a no-asset case. The law requires the disclosure of all debts under the penalty of perjury. This is true whether you owe one dollar or one billion dollars. There is no such thing as “I don’t want to include this debt in my bankruptcy”.
- Debts for Personal Injury Caused by Intoxicated Operation of a Motor Vehicle: Debts from injuries while operating a motor vehicle under the influence are not dischargeable in bankruptcy.
- Homeowners’ Association Debts: HOA assessments that accrue prior to filing bankruptcy are dischargeable, but the lien and the HOA’s foreclosure rights for non-payment will still exist. HOA fees accruing after you file Chapter 7 are not dischargeable. This is true even if you intend to surrender the house and allow it to go into foreclosure. HOA assessments that come due after you file Chapter 13 may be dischargeable, but the lien will still exist. If the lien exists, the HOA can foreclose, even if the discharge prevents the HOA from suing you.
Remember that the specific rules and eligibility criteria vary depending on whether you file Chapter 7 or Chapter 13 bankruptcy. Always consult with a bankruptcy attorney to understand your unique situation and explore your options.