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The point of filing a bankruptcy, most often, is to discharge debt. What debts are discharged and what debts are not?

A discharge means that the legal obligation to pay a debt is wiped away. For all intents and purposes, the debt is gone. This applies in a Chapter 7 to most unsecured, garden variety debt, such as credit card debt. However, certain types of debt are not dischargeable in a chapter Chapter 7 bankruptcy. These include:
(1) debts resulting from fraud, misuse of funds, embezzlement, or larceny
(2) debts that arise under false pretenses, including bogus representation, fraud, or false financial statements
(3) debts for certain taxes
(4) certain debts that result from the purchase of luxury merchandise or cash advances
(5) obligations a debtor neglects to list in the bankruptcy schedules
(6) alimony, child support, and other debts arising out of a divorce or separation
(7) student loans
(8) orders of restitution and debts resulting from willful and malicious injury

In Chapter 13 cases, and with a few exceptions, the debts addressed in the Chapter 13 plan will be discharged when all payments under the plan have been made, or in some cases, if the debtor qualifies for what is called a "hardship discharge". The only debts not discharged under Chapter 13 are:

(1) criminal fines and restitution
(2) obligations not listed on the debtor's bankruptcy schedules
(3) debts for spousal maintenance, alimony, and child support
(4) student loans
(5) debts related to drunk driving convictions

The U.S. Bankruptcy code provides exceptions to discharge under section 523. In extreme cases, the discharge can be denied all together where there has been conduct which can be seen as an effort to hinder, delay or defraud creditors.

Additional Resources

This guide is offered for informational purposes only. It is not offered as, and does not constitute, legal advice. Laws vary widely from state to state. You should rely only on the advice given to you during a personal consultation by a local attorney who is thoroughly familiar with state laws and the area of practice in which your concern lies.

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