Debts Not Covered by Chapter 7 Bankruptcy: An Overview

Whereas Chapter 7 bankruptcy is seen as a way of ridding oneself of excessive debt, there are several debts not covered by Chapter 7 bankruptcy.

The U.S. Bankruptcy Code (U.S.C. Title 11) lists 19 types of non-dischargeable debts based upon the nature and procurement of the debt. In most cases, these debts are outright non-dischargeable. Consequently, at the conclusion of the bankruptcy case, creditors may continue with collection efforts. Additionally, in some cases, creditors may challenge the discharge of their particular debt.

Non-dischargeable Debts

Unless the debtor demonstrates extraordinary circumstances, debts that are always non-dischargeable include:

  • Unscheduled debts/debts not listed on the bankruptcy petition
  • Some taxes
  • Spousal or child support
  • Attorney fees in support and child custody cases
  • Debts owed to a former spouse/child due to divorce
  • Fines, penalties, and other government debts
  • Student loans
  • Personal injury debts arising from driving while intoxicated
  • Some retirement plan debts
  • Unpaid homeowners’ association fees
  • Court fines and penalties such as restitution

Non-dischargeable Debts Following Creditor Objections

As previously mentioned, creditors may object to the discharge of certain debts. These debts include:

  • Credit card purchases for luxury goods valued at over $650 and purchased within 90 days of filing bankruptcy
  • Cash advances over $925 within 70 days of filing bankruptcy
  • Debts resulting from fraud
  • Debts arising from willful and malicious harm to another’s person or property

Denial of Discharge

In some cases, the court may outright deny a Chapter 7 discharge. Most cases of denial of discharge occur when the debtor does not adhere to court rules or fails to provide the required information. Even if a debt may be dischargeable, failing to fully cooperate may hinder discharge. Other reasons for denial include:

  • Withholding tax documents
  • Failing to attend a course on personal financial management, if ordered
  • Transferring or hiding property
  • Destroying financial records
  • Committing perjury
  • Failing to account for “lost” assets
  • Violating a court order
  • Filing a previous bankruptcy within particular time frames

For more information about Chapter 7 bankruptcy, please contact us.

Please contact our law office concerning your case. The content of this article does not constitute an attorney-client relationship.