Real Estate Attorney Discusses Non-Dischargeable Debts

What are Non-Dischargeable Debts?

Dischargeable debts are outstanding debts or unpaid debts that you can include in your bankruptcy filings.  They include medical bills, credit card bills, some personal loans and other unsecured debts. But there are debts that cannot be wiped out or discharged in Chapter 7 or Chapter 13 Texas Bankruptcies.

For a Chapter 13 Bankruptcy, you will have to pay the debts in full. Under a Chapter 7 bankruptcy, after your discharge, you will still be required to repay the non-dischargeable debts. Apart from that, you will have to continue repaying secured debts if you intend to keep your secured property. The non-dischargeable debts generally include:

Domestic obligations

These include unpaid child support, alimony payments and other debts dedicated to family support. Spousal and child support is money paid to ensure the child or former spouse tare able to meet basic living requirements.

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Income debts within 3 years and all other tax debts

It is very difficult to discharge income tax debt because it is hard to meet the requirements.  You are also required to pay debt you did not list when you filed bankruptcy. The law requires you to list all your debts when you file for bankruptcy.

Student loans

These loans are not secured debts and you cannot wipe them out by filing bankruptcy. The only way you can receive some relief is by demonstrating “undue hardship”. For example, a disability that stops you from earning a living can be considered “undue hardship”.

Debts related to injury or death caused by an intoxicated debtor

An individual that gets into debt because the individual caused injury or death while driving in an intoxicated state cannot have that debt discharged.

Secured loans

Car payments and mortgages are the most common secured debts.  You can keep your house or car after filing but you will still have to continue making the payments.  These kinds of debts are only dischargeable if you give back the car or the house.

Penalties and fines for violating the law

This includes traffic tickets and criminal restitution. These debts stay with you forever. But there are some government debts that can be discharged. Your lawyer will assist you in identifying them.

Sometimes a debt is declared dischargeable or not depending on your specific situation. So consult a lawyer if you are not sure whether an item is dischargeable in your case. Under a Chapter 7 bankruptcy, the judge may declare some debts non-dischargeable if a creditor challenges your request to discharge them.  They include:

  • Debts from breach of trust, embezzlement or larceny
  • The debts you get  because of malicious injury to another person or to another person’s property
  • If the debt exists because of fraudulent activities
  • Loans of a certain amount and cash advances taken within 60 days of filing
  • Debt from purchasing luxury items or services of a certain amount made within 60 days of filing
  • Any debt you owe under a divorce decree or settlement

You can spread out your payments for non-dischargeable debts over 3 to 5 years when you file a Chapter 13.  A Chapter 7 has the potential to free you completely but it does not solve your non-dischargeable debt problems.