Which debts are not affected by filing bankruptcy?

If you are having debt problems, you may be considering bankruptcy to receive a discharge of your debts, which will forever relieve you of the legal obligation to repay them. Although you may believe that bankruptcy will wipe away all of your pre-bankruptcy debts, this is not always the case. Since the discharge only applies to certain debts, not all of your debts will potentially be eliminated during the process.

Which debts are non-dischargeable?

In some cases, whether a debt is dischargeable or not depends on whether you file Chapter 7 or Chapter 13 bankruptcy. However, certain debts cannot be discharged in any type of bankruptcy. Debts that fall within this category include:

Debts that are not disclosed on your bankruptcy schedules

• Tax liens

• Condominium or cooperative housing fees

• Child support, alimony and other domestic support expenses

• Recent taxes

• Student loans (except in rare circumstances discussed below)

• All debts obtained through fraud, false pretenses or false representations

• Personal injury lawsuit judgments against you for wrongful death or injury to another arising from the operation of a vehicle, aircraft or watercraft while under the influence of intoxicants.

As discussed earlier, some debts are dischargeable in one type of bankruptcy but not another. For example, if you file Chapter 13 bankruptcy instead of Chapter 7, the following debts are dischargeable:

• Debts related to property settlements in your divorce or separation

• Debts for willful or malicious injury to the property of someone else

• Debts incurred by owing non-dischargeable taxes

Student loans

By law, federal student loans cannot be discharged in bankruptcy. Although private student loans are technically dischargeable, the law requires you to prove a case of "undue hardship" before they may be discharged. Since this would require you to prove that the burdensome financial situation brought on by the student loans is likely to continue indefinitely in the future without any relief (i.e. an inheritance, better paying job, etc.), most filers (except the rare extreme case) are not able to get their private student loans discharged in bankruptcy.

Do not be discouraged from getting help

Although certain debts cannot be eliminated in bankruptcy, you should not let that fact serve as an excuse to rule out bankruptcy protection. Bankruptcy can eliminate most of the other debts that you have, which can free up financial resources to devote towards paying off your non-dischargeable debts. Additionally, if you file Chapter 13 bankruptcy, you will have 3-5 years to catch up with or pay off your non-dischargeable debts under the repayment plan. During this time, you will receive bankruptcy's protection against garnishments, lawsuits and other collection attempts regarding these debts.

If you are struggling with financial obligations, seek out the advice of an experienced bankruptcy attorney as soon as you can when you have the most options available to you. An attorney can outline the possible solutions to your problem and recommend one that would best fit your situation.