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Some individuals and businesses overwhelmed by debt consider filing for bankruptcy to make a fresh financial start. However, while bankruptcy covers most unsecured debts, a bankruptcy discharge does not eliminate all debts and financial obligations.
Non-dischargeable debts are a type of debt that are not eliminated even when an individual has filed for bankruptcy. The following are some examples of non-dischargeable debts in Chapter 7 bankruptcy:
- Domestic support obligations. This includes child support, alimony, and maintenance.
- Legal fees from child custody and child support proceedings
- Debts incurred through a divorce decree or settlement agreement
- Court-ordered restitution, penalties, and fines
- Debts resulting from personal injury or wrongful death lawsuits while operating a vehicle under the influence of alcohol or drugs.
- Debts from willful and malicious conduct resulting in injury or death
- Taxes and tax liens
- Student loans and benefits
- Unlisted or unscheduled debts
- Debts that were deemed non-dischargeable in a prior bankruptcy filing
- Debts incurred by fraudulent means
- Some types of condominium dues, such as Homeowner's Association (HOA) fees
In Chapter 7 bankruptcy, certain non-dischargeable debts are given priority over other types of debts. If a debtor has turned over assets or property to a bankruptcy trustee for liquidation, the resulting disbursement will go toward priority debts first. Some of the most common priority debts in Chapter 7 are income taxes due within three years of the bankruptcy filing date, claims for personal injury or death and spousal and child support obligations
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Chapter 7's automatic stay prevents collection actions against debtors by creditors or debt collection agencies, but only until the bankruptcy proceedings have concluded. Creditors can try to petition the courts to lift the stay if it no longer appears to serve its intended purpose.
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