Filing Bankruptcy - Understanding Non-Dischargeable Debts

Many people have the misconception that filing bankruptcy will erase all their liabilities. There would be no obligation to pay the amounts that they owe to their various creditors. However, this not true at all. There are certain kinds of loans that have been considered as non-dischargeable ones. Filing under chapter 7 bankruptcy norms will eliminate all kinds of debts but you would still owe the non-dischargeable ones. Depending upon your specific case and the judgment of court, there can be a wide range of such debts.
Following are some of the most common ones.

Student Loans

No matter for whatever reason is that you have been forced towards filing bankruptcy, educational based debts such as student loans cannot be exempted. These may include loans for board, room, books, tuition etc. Even if the court grants your petition and orders for the liquidation of all your assets, you will still be liable to pay these loans off. However, there is a rare exception, as per which if you are able to prove the bankruptcy court that the loans will cause undue hardship for you, they may be discharged as well. For example, you may have to show some permanent disability that prevents you from getting a job and living a normal financial life. If you are capable of proving such aspects, the court may order to discharge the student loans.

Debts Owed To The Court

If you owe some court fees, such debts are also not dischargeable while you are filing bankruptcy under chapter 7. Likewise, because of any criminal activity, if you owe a certain amount to the victim or the court, such amounts are also not dischargeable. Any kind of Court imposed restitution cannot be discharged. In all cases, all such debts come under the title of non-dischargeable.

Debts Associated With A Divorce Or Marital Case

If you owe a certain amount associated with a divorce or marital decree by the court, such debts also cannot be discharged under chapter 7 of the bankruptcy code. Some people have the misunderstanding that these amounts can be discharged if the ex-spouse does not have any objection, which is not true. Even if the ex-spouse does not object, these amounts come under non-dischargeable debts while you are filing bankruptcy for straight liquidation. Therefore, while you are planning to file your petition, you must keep in mind that you will not be able to discharge the debts associated with a divorce or marital case.

Certain Kind Of Taxes

All kinds of taxes except the following are non-dischargeable as per the new bankruptcy laws. Even if you are declared as bankrupt, you will still be liable to pay these taxes.

Taxes measured by gross receipts or income taxes

If the taxes are accurate and no omissions or errors in the return are found in the IRS

If the taxes are older than three tax years

What is more, if you owe an amount associated with Alimony and child support, these are also non-dischargeable while you are filing bankruptcy for complete liquidation.