What Debts are Non-Dischargeable in Bankruptcy?
The biggest benefit of filing bankruptcy is that your debts are discharged, meaning your creditors can never try to collect those debts; in essence the debts are eliminated.
However, there are some debts that are unaffected by the bankruptcy discharge. The most popular category of non-dischargeable debts are income taxes owed to the IRS (although even income taxes may be dischargeable in certain circumstances). Another popular category of non-dischargeable debt is alimony or child support, called domestic support obligations under the Bankruptcy Code.
However, there are some other less popular situations that could impact your ability to discharge a particular obligation.
If you obtain a loan through “false pretenses, a false representation, or actual fraud” your debt may be dischargeable under Section 523(a)(2) of the Bankruptcy Code. Situations like this could include lying on a mortgage application, or falsifying other documents to obtain a loan.
Someone who commits fraud while acting in a fiduciary capacity, embezzlement or larceny cannot discharge that obligation, pursuant to Section 523(a)(4). The best example of a situation like this might be Bernie Madoff, or a financial advisor who stole money from you – the financial advisor’s obligation to repay you could be non-dischargeable in bankruptcy court.
Willful and malicious injury by the debtor to another or the property of another is also a category of debt that is non-dischargeable. If, for example, the debtor commits arson, his obligation to repay the damages could be non-dischargeable under Section 523(a)(6) if the creditor can prove that the arson was willful and malicious.
If the debtor causes death or personal injury while driving drunk, or under the influence of a drug or another substance, the damages caused could be non-dischargeable pursuant to Section 523(a)(9).
Under Section 523(a)(16) fees or assessments that come due to a condominium or homeowner association subsequent to the date of filing are also non-dischargeable. So if you owe your association and file bankruptcy, you may not be required to repay any assessments that are past due, but you will be responsible to pay any assessments that come due after the filing of your bankruptcy case.
If you have questions as to whether a particular debt is dischargeable in bankruptcy (either because you’re thinking of filing, or because someone who owes you a debt has filed bankruptcy), please contact us to schedule a free initial consultation to discuss your options at 727-261-0224 or email me directly at shawn@yesnerlaw.com. Please also subscribe to the Crushing Debt Podcast, on Apple Podcasts, Spotify, and other podcast players, including Amazon Echo (“Alexa”) for more free information about these topics.
Shawn M. Yesner, Esq., is the host of the Crushing Debt Podcast and founder of Yesner Law, P.L., a Clearwater-based boutique real estate and consumer law firm that helps clients eliminate the financial bullies in their lives. We assist clients with asset protection, the sale and purchase of real property, Chapter 7 liquidation, Chapter 13 reorganization, bankruptcy, foreclosure defense, debt settlement, landlord/tenant issues, short sales, and loan modifications in Clearwater, Tampa, Westchase, Odessa, Oldsmar, Palm Harbor, Pinellas Park, Largo, St. Petersburg, and throughout the greater Tampa Bay area.
