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1. Tax Debts.
Most tax debts, including income taxes less than 3 years old, can
not be discharged in a
Chapter 7
bankruptcy case. See
Discharging Tax Claims in Bankruptcy
for an in depth discussion of the discharge of tax claims in Chapter
7, 11 and 13 bankruptcy cases.
Index
2. Debts Incurred to Pay Non-Dischargeable Taxes.
Any debt incurred to pay a non-dischargeable federal, state or local
tax is likewise not dischargeable in a Chapter 7 or 11 bankruptcy
case. If a debtor obtains a loan to pay off a non-dischargeable tax
debt, the loan is not dischargeable in a Chapter 7 or 11 case. Note:
These debts are dischargeable in Chapter 13 cases. See the discussion of the Chapter 13 "super" discharge below (15. Chapter 13 - Super Discharge).
Index
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Example. #1.
Taxpayer files his federal income tax returns for the 2003
and 2009 tax years in a timely manner. He owes $10,000 for
each of these tax years. He obtains a $20,000 unsecured
loan from ABC Bank during January 2011 for the express purpose
of paying the taxes, and pays off all prior taxes. Taxpayer
files for Chapter 7 bankruptcy during August, 2011. The
bankruptcy filing will discharge $10,000 of the
$20,000 debt owed to ABC Bank because the 2003 income taxes
were dischargeable in bankruptcy. The bankruptcy filing
will not discharge the remaining $10,000 debt owed
to ABC Bank because the 2009 income taxes were not dischargeable
in bankruptcy.
Index
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3. Fraud Claims.
Index
3.1. General Rule.
Any debt for money, property, services, or credit obtained by fraud
or the use of a false financial statement, can not be discharged
in any bankruptcy case (Chapter 7, 11 or 13).
Index
3.2. Fraud Defined.
Fraud is generally defined as a misrepresentation (a lie) about an important
fact which another person relies upon in deciding to enter into a transaction.
A debt will be considered fraudulent if, at the time the debt was
incurred, the debtor:
► did not intend to
repay the debt (i.e. already decided not to pay);
► already formed an
intention to file for bankruptcy; or
► did not have a reasonable
possibility of repaying the debt (i.e. had an obvious inability to pay
the debt).
Index
3.3. Fraud Presumption.
The following debts are presumed to be fraudulent:
►
Cash Advances. Cash advances exceeding
$825 made within 70 days of a bankruptcy filing. Cash advances obtained from two or more different creditors can be added to establish the presumption of fraud.
► Luxury Goods or Services.
Debts exceeding $550 to purchase luxury goods or services from
a single creditor within 90 days of a bankruptcy filing.
The presumption makes it easier for a creditor to
prove that cash advances or purchases of luxury goods were fraudulent.
The creditor has the burden to prove fraud if the debt is incurred more
than 70 days (for cash advances) and 90 days (for luxury goods and services)
before the debtor files for bankruptcy. The burden shifts to the debtor
to give a reasonable explanation disproving the fraud presumption if
the cash advances or charges were made within these time periods.
Index
3.4. Credit Card Debts.
The presentation of a credit card to a merchant constitutes an implied
promise that the purchaser will repay the debt. Credit card debts and
other loans are considered fraudulent if, at the time the debt was
incurred, the debtor either:
► did not intend to
repay the debt; or
► did not have a reasonable
possibility of repaying the debt.
Credit card charges are normally considered fraudulent
if the consumer makes charges knowing that he does not have a reasonable
ability to repay the debt. The court will consider the following factors
to determine if the charges were fraudulent:
Index
3.4.1.
Time Between Card Use & Bankruptcy Filing. Many
credit card issuers will review and scrutinize the account activity
occurring within 6 months before the debtor files for bankruptcy to
determine if the charges were fraudulent. The charges are more likely
to be considered fraudulent if they are made within several months
before the debtor files for bankruptcy. The charges are less likely
to be considered fraudulent if a long time period passes between the
date the debtor makes the charges and the date he files for bankruptcy.
Index
3.4.2.
Consultation with Bankruptcy Attorney. Any debt
incurred after the debtor considers filing or bankruptcy, or consults
with a bankruptcy attorney, will usually be considered fraudulent,
regardless of the circumstances. Communications between an attorney
and client are privileged. Neither the attorney nor client can be compelled
to reveal what they discussed. However, a debtor can be compelled to
reveal the bare fact that he met with a lawyer. If the lawyer practices
bankruptcy law, most courts will infer that the attorney and client
discussed a possible bankruptcy filing.
Index
3.4.3. Number of Charges.
The charges are more likely to be considered fraudulent if the debtor
makes a large number of charges rather than a few isolated purchases.
Index
3.4.4. Dollar Amount
of Charges. The charges are more likely to be considered
fraudulent if the dollar amounts of the charges are large. Cash advances
are also more likely to be considered fraudulent.
Index
3.4.5.
Debtor's Financial Condition at Time of Card Use.
This factor is very important. If the debtor is in good financial shape
when he makes the charges, and has a good chance of repaying the debt,
the charges are less likely to be considered fraudulent. A fraud finding
is much more likely if the debtor has few assets or financial resources
when he makes the charges.
Index
3.4.6. Exceeding Credit
Limit. The charges are more likely to be considered
fraudulent if the debtor exceeds his credit limit when he makes the
charges.
Index
3.4.7.
Multiple Charges Within Short Time Period. Multiple
charges made within a short time period may indicate that the debtor
intended to go on a pre-bankrupty spending spree. The charges are
less likely to be considered fraudulent if they are spread out over
a long time period.
Index
3.4.8. Was Debtor Employed?
The charges are more likely to be considered fraudulent if the debtor
is unemployed at the time he makes the charges. If the debtor is employed
when he makes the charges, he will be able to argue that he intended
to use his wages to pay the debt.
Index
3.4.9. Employment Prospects.
The charges are more likely to be considered fraudulent if the debtor
is unemployed at the time he makes the charges, and also has a poor
chance of obtaining a new job. Conversely, if the debtor is unemployed
but has good prospects for obtaining a new job, the charges are less
likely to be considered fraudulent.
Index
3.4.10. Sudden
Changes in Buying Habits. The charges are more
likely to be considered fraudulent if the debtor had a prior habit
of making few charges over a long time period, and then suddenly started
making large charges over a short time period.
Index
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Example #2.
Debtor approaches ABC Bank for a $20,000 loan. He gives
ABC Bank a financial statement stating that he owns land,
stocks and other assets worth $50,000. ABC Bank relies on
this financial statement and loans him the money. In fact,
Debtor’s land and other property is worth only $10,000,
and he does not even own some of the property listed on
the financial statement. Debtor is guilty of fraud because
he lied on the financial statement. The $20,000 debt is
not dischargeable in a Chapter 7 bankruptcy case.
Index
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Example #3.
Debtor is an airline pilot earning $100,000 per year. The
airline industry collapses because of terrorist high jackings,
and Debtor losses his job. He has no reasonable possibility
of obtaining employment in the near future, except a minimum
wage job at a fast food restaurant or convenience store.
At the time Debtor lost his job, he had 8 credit cards with
an available credit line of $50,000. He also had a $250,000
home, a $2,500 mortgage payment, 3 children and a wife that
refuses to work. Debtor uses the credit cards to pay his
mortgage and other living expenses over the next 6 months.
At the time he makes the charges, he knows that he has no
reasonable possibility of obtaining a decent job to repay
the credit card debt. The credit card charges will be considered
fraudulent and are not dischargeable in a bankruptcy
case because he knew that he would not be able to repay
the debt when he made the charges.
Index
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4.
Alimony & Child Support. Debts owed for
alimony or child support are not dischargeable in any bankruptcy
case (Chapter 7, 11 or 13). Alimony and child support payments can not
be discharged, regardless of whether it relates to arrearages (past
due amounts) or an ongoing support obligation.
Index
5.
Divorce Decree Debts. Most spouses have
debts to divide when the marriage ends in divorce. The divorce decree
will usually allocate the payment responsibility between the spouses.
The decree will typically award the house to one spouse and specify
who is responsible to pay the mortgage. The decree will also divide
the payment responsibility for the credit card debts or medical bills.
It is very common for one spouse to seek bankruptcy protection in
an attempt to discharge the debts he was ordered to pay in a divorce
decree. The entry of a bankruptcy discharge can have the effect of
reversing the debt payment obligations in the divorce decree.
Index
5.1.
Non-Binding Effect of Divorce Decree on Creditors.
A divorce decree is merely a contract between the spouses which is enforceable
by the family court. The division of debt made in a divorce decree is
not binding on creditors. If one spouse fails to pay a debt as
ordered in a divorce decree and the other spouse was liable on the debt
prior to divorce, the creditor is legally entitled to collect from the
other spouse.
Index
5.2.
General Rule Re: Discharge of Divorce Decree Debts.
5.2.1. Chapter 7 Cases. Debts owed to a former spouse or child and incurred in connection
with a prior divorce or separation case in state court are not
dischargeable in a Chapter 7 or 11 case. The 2005 bankruptcy reform
legislation eliminated all prior exceptions to this rule.
Index
5.2.2. Chapter 13 Cases.
In Chapter 13 cases, debts owed to a former spouse or child in connection
with a prior divorce case can be discharged. Divorce decree debts
can be discharged if all plan payments are completed.
Index
5.3. Bar to Discharge Is
Automatic. The non-bankrupt ex-spouse or child
does not need to file a discharge contest (a lawsuit)
against the bankrupt spouse or parent to prevent the divorce decree
debts from being discharged. The bar to discharge is automatic.
The non-bankrupt ex-spouse or child does not need to raise the issue
while the bankruptcy case is pending. The non-bankrupt ex-spouse
or child can enforce the divorce decree obligations in state court at
any time after the bankruptcy case has been concluded.
Index
6. Student Loans.
Index
6.1. General
Rule. Student loans are not dischargeable
in any bankruptcy case (Chapter 7, 11 or 13) unless the debtor
can prove that he will suffer an "undue hardship" if the debts
are not discharged. A non-dischargeable educational debt is defined
as any:
(a) educational benefit overpayment
or loan insured, guaranteed or funded by any governmental unit or non-profit
institution; or
(b) obligation to repay funds
received as an educational benefit, scholarship or stipend.
Index
6.2.
Benefit Overpayment. An "educational benefit overpayment"
is an overpayment from a government program such as the GI Bill where
the student receives a payment after leaving school. This type of debt
can not be discharged in bankruptcy and must be repaid.
Index
6.3.
Loan Requirement. Not all educational debts are
considered "loans." Most courts state that the transaction will not
be considered a "loan" unless the school extends credit to the student.
In other words, the school and student must agree in advance that the
school will allow the student to attend classes and pay the fees at
a later time. An unpaid debt for tuition or fees will constitute a non-dischargeable
student loan only if the school and student agree in advance that the
student can repay the debt at a later time.
Index
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Example
#4. Student enrolls at Pay Me
Now University. Pay Me Now policy requires all students
to prepay all fees before classes begin. Student does not
have the money to pay his fees. Pay Me Now lets Student
attend classes anyway. Student withdraws from Pay Me Now
before the semester ends, never pays the fees, and files
for bankruptcy. Most courts would rule that the tuition debt does not constitute a "loan" and is dischargeable
in bankruptcy. The tuition debt is not a "loan" because
Student and Pay Me Now never agreed in advance that Student
could pay the tuition at a later time.
Index
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6.4. Benefit, Scholarship
or Stipend. Debts for an educational benefit, scholarship
or stipend are not dischargeable only if funds were advanced.
If no funds were advanced, a debt to repay an educational benefit, scholarship
or stipend can be discharged in bankruptcy.
Index
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Example #5.
The unpaid tuition debt in
Example #4 also fails to
qualify as "funds received as an educational benefit, scholarship
or stipend." Although Pay Me Now provided an "educational
benefit," no funds were advanced. Most courts would rule
that the tuition debt is dischargeable in bankruptcy.
Index
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6.5.
Seven Year Age Exception.
Index
6.5.1. Old Law.
Before, October 1998, student loans were dischargeable in bankruptcy
if the debtor filed for bankruptcy more than 7 years after he was
obligated to start making loan repayments.
Index
6.5.2.
Current Law - 7 Year Exception Removed. On October
7, 1998, the law was changed and the 7 year age rule was removed. Under
current law, all student loans are not dischargeable in bankruptcy,
regardless of the age of the debt.
Index
6.6. Hardship Discharge
Exception.
Index
6.6.1.
General Rule. The "undue hardship" exception is
the only exception to the general rule preventing discharge of student
loans in bankruptcy. A student loan can be discharged only if a failure
to discharge the debt would "impose an undue hardship on the debtor
and the debtor’s dependents."
Index
6.6.2.
Standards for Defining Undue Hardship. The words
"undue hardship" are not defined by the Bankruptcy Code.
Index
(A) Brunner
Test. The Fifth Circuit Court of Appeals (the appeals
court which controls all cases filed in Texas, Louisiana and Mississippi)
has adopted the standards set forth in
Brunner v. New York State Higher Educ. Servs.
Corp. In
Brunner, the court stated that
a debtor can establish "undue hardship" only if:
► the debtor has made a good faith
effort to repay the loan;
► the debtor and his dependents
can not maintain a minimal standard of living; and
► the debtor’s state of affairs is
likely to continue for a significant portion of the repayment period.
Index
(B)
Gerhardt. The Fifth Circuit Court of Appeals
issued an opinion in
In Re: Gerhardt. The
Gerhardt case expressly adopts
the
Brunner test as the prevailing
standard in the Fifth Circuit. However, by any measure,
Gerhardt is an extremely conservative
interpretation of the already difficult
Brunner test.
Gerhardt actually adopts additional
requirements which are much stricter that the
Brunner test. In the Fifth
Circuit, the debtor must additionally prove that:
Index
► The circumstances that impacted
the debtor's future earning potential were not present when the debtor
applied for the loans or have gotten worse.
Index
► The debtor must specifically prove
a total incapacity in the future to pay the student loan debts for reasons
not within his control.
Index
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Example #6.
In
Gerhardt,
the debtor obtained $77,000 in student loans to finance
his music degree. He became a professional cellist.
At time of trial he was 43 years old, healthy, well educated,
and had no dependents. The evidence tended to show
that he could not obtain a position at a higher paying orchestra.
However, he could obtain additional steady employment in
a number of different arenas. For instance, he could attempt
to teach full time, obtain night school teaching jobs, or
work as a music store clerk. Under these circumstances,
the court held that:
(a) there were
no circumstances out of Gerhardt's control that contributed
to his inability to repay his student loans; and
(b) a debtor may
not choose to work only in the field in which he was trained,
obtain a low paying job, and then claim that it would be
an undue hardship to repay his student loans.
Index
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Example #7.
In another case,
Ward v. U.S. Dept of Education,
a married couple in their their 30's (married for over 5
years) decided to start a family. At trial, the couple had
two children and were expecting the birth of their third
child. The expenses related to the children made it impractical
for the wife to work for the foreseeable future. The Houston
bankruptcy court, feeling "haunted" by the
Gerhardt
decision, observed that the couples' decision to start a
family, although normal and understandable, was within their
control. The wife would have been able to work and continue
to pay her student loans if the couple had abstained from
having any children. The court ruled that the couple failed
to satisfy the second prong of the
Brunner test because
their decision to start a family contributed to their
financial problems. The court essentially ruled that the
married couple, saddled with over $250,000 in student loans,
should have completely abstained from having any children
for the rest of their natural lives so that the wife could
work at a minimal job to earn the funds necessary to pay her
student loans into her elderly years.
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6.6.3. Compelling
Circumstances Necessary. The bottom line: It
is extremely difficult to obtain a hardship discharge of a student loan
debt. To obtain a hardship discharge, the debtor must commence a
lawsuit, in bankruptcy court. The lawsuit proess can be very expensive,
and will almost always involve a large legal fee. Most debtors will
not have the financial resources to pursue such a lawsuit. Even if the
debtor can afford the lawsuit, most courts will want to see a very compelling
case before granting a hardship discharge. The only cases that have
a strong likelihood of succeeding are cases where the debtor is disabled
or crippled. At best, all other cases are extremely difficult.
Index
7. Fines,
Penalties & Criminal Restitution.
Index
7.1. Civil Fines & Penalties. All civil fines
and penalties owed to governmental units are not dischargeable
in a Chapter 7 or 11 case, but can be discharged in a Chapter 13 case.
Index
7.2. Criminal
Fines & Restitution. All fines and restitution
obligations issued in criminal cases can not be discharged in
any bankruptcy case (Chapter 7, 11 or 13).
Index
7.3. Tax Penalties
More Than 3 Years Old. The only exception is for
tax penalties more than 3 years old. A debtor can discharge a tax penalty
in a Chapter 7, 11 or 13 case if it relates to a transaction or event
that occurred more than 3 years before he files for bankruptcy.
See
5.2 Penalties at the article on
Discharging Tax Debts in Bankruptcy
for a discussion of discharging tax penalties in bankruptcy.
Index
8. Unlisted Creditors.
Index
8.1.
General Rule.
Index
8.1.1.
All Creditor Names & Addresses Must Be Listed.
The creditor’s name and address is the most important information on
the bankruptcy schedules. A Debtor must list the proper name and address
of every creditor. If the creditor’s name is improperly spelled or the
address is incorrect, and the creditor never receives notice of the
bankruptcy filing, the debt may not be discharged in bankruptcy.
Index
8.1.2. Debt Amounts
Not Important. The debtor should make a good faith
effort to list the approximate amount owed to all creditors. However,
the debtor does not need to determine or list the exact amount
of the debt. If the creditor’s name and address is correctly listed
so that he receives notice of the bankruptcy filing, the debt will
be discharged regardless of whether he incorrectly lists the debt amount.
Index
8.2. Actual Knowledge
Exception. If the creditor obtains actual knowledge
of the bankruptcy filing in time to file a discharge contest, the
debt will be discharged even if the debtor fails to list the creditor
on the bankruptcy schedules.
Index
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Example #8.
Debtor owes $100,000 to ABC
Bank. He does not list ABC Bank anywhere on the
bankruptcy schedules. ABC Bank never receives any formal
written notice of the bankruptcy from either Debtor or
the bankruptcy court. About 60 days before Debtor
receives a bankruptcy discharge, Jane Doe, a Vice
President at ABC Bank, telephones Debtor and demands
payment. Debtor informs Jane that he filed for
bankruptcy. He gives her the case number, the
bankruptcy court location, and the name and phone number
of his bankruptcy attorney. Jane writes a memo to the loan
file reciting that Debtor filed for bankruptcy, and
records the case number, court location and other
information given by Debtor. The debt owed to ABC Bank
will be discharged because ABC Bank had actual knowledge of
the bankruptcy filing in plenty of time to file a
discharge contest.
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8.3. No-Asset Cases. Approximately 99 percent
of all consumer bankruptcy cases filed under Chapter 7 are "no asset"
cases. A "no asset" case is a case in which all of the debtor’s assets
are either exempt from seizure under federal or state law, or are of
such minor value that the bankruptcy trustee abandons the assets.
The 5th Circuit Court of Appeals has stated that in "no asset" cases,
a debtor may receive a discharge of unlisted debts if:
Index
► the failure to schedule the creditor
was not intentional but was due to negligence or inadvertence;
► the bankruptcy court’s docket
will not be unduly disrupted; and
► the creditors right to file
a discharge contest has not been prejudiced.
At best, this area of bankruptcy law is very grey, and a debtor should
never rely on it. First, the process of obtaining a discharge
of an unlisted debt is very expensive and cumbersome. Under current
practice in this circuit, the debtor must attempt to reopen his bankruptcy
case and ask permission to add the unlisted creditor to the bankruptcy
schedules. Second, the debtor would then have the difficult burden of
presenting evidence in court proving all three elements listed above.
The most recent two case opinions on this subject ruled against the
debtor, and did not allow him to add the unlisted creditor under circumstances
suggesting that the debtor was merely negligent in failing to list the
creditor. Finally, if the creditor has any possible means of claiming
that the debt was non-dischargeable because of fraud or other misconduct,
the court will usually deny the debtor permission to add the unlisted
creditor.
Index
9.
Embezzlement, Theft or Breach of Fiduciary Duty.
Any debt for embezzlement, theft, conversion, fraud or misuse of funds
by a fiduciary can not be discharged in a Chapter 7, 11 or 13
case.
Index
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Example #9.
P.I. Joe is a personal injury lawyer. He settles a $50,000
personal injury claim for Client. He is in financial difficulty
when he settles the case and uses the settlement funds to
pay his personal bills. Unfortunately, P.I. Joe’s financial
problems get worse. He contemplates filing for bankruptcy. P.I. Joe is guilty of converting (stealing) Client’s
settlement funds. He can not discharge the $50,000 debt owed
to Client in any bankruptcy case (Chapter 7, 11 or 13).
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10. Willful
Injury to Persons or Property.
10.1. Death or Injury
to Persons.
Debts related to a debtor's conduct
in willfully and maliciously injuring or causing the death of another
person are not dischargeable in a Chapter 7, 11 or 13 case.
This exception prevents the discharge of civil damage awards for assault,
rape or murder.
Index
Under the 2005 bankruptcy reform laws, debts for willfully causing death
or injury to a person are not automatically non-dischargeable in
Chapter 7 cases, but are automatically non-dischargeable in Chapter
13 cases. In other words, the creditor must file a separate
lawsuit in bankruptcy court to establish that the debt is non-dischargeable
in a Chapter 7 case, but no lawsuit is required in Chapter 13 cases.
Debts for willful injuries to persons are automatically non-dischargeable
in cases filed under Chapter 13.
This result is rather odd. It runs counter to the policy that
Chapter 13 relief is normally more favorable to the debtor. For
all other debt types, if the debt is automatically non-dischargeable,
it is automatic for cases filed all chapters of the Bankruptcy Code.
Likewise, if the debt type requires a lawsuit, the lawsuit requirement
normally applies regardless of the chapter under which the case was
filed. This is the only example of a debt type that is automatically
non-dischargeable under one chapter but not in cases filed under a different
chapter.
Index
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Example #10.
O.J. Juice, an ex-football player, viciously murders his
wife and a male companion. The wife’s parents bring a lawsuit
against O.J. seeking damages for the wrongful death of their
daughter. The jury issues an 8.5 million dollar damage award
in favor of the wife’s parents. O.J. can not discharge
the debt in any bankruptcy case (Chapter 7, 11 or 13).
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10.2. Destruction
or Damage to Property.
Debts related to a debtor's
conduct in willfully and maliciously destroying or damaging property
are not dischargeable in a Chapter 7 case, but can be discharged
in a Chapter 13 case. This exception prevents the discharge of
civil damage awards for arson, vandalism, burglary or theft in Chapter
7 cases, but not in Chapter 13 cases.
Index
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Example #11.
John Burns hates his little brother Billy Bob. John
has always been jealous of Billy Bob's business success.
He also resents the fact that Mamma loved Joe Bob more than
him. John decides that Billy Bob must suffer.
He intentionally burns down Joe Bob's house. Joe Bob
sues John in a Texas state court and recovers a $250,000
civil damage judgment against him.
At the time that Joe Bob obtains the judgment, John has
a job making only $1,100 per month. John has always
been a slacker and has no ability to obtain employment making
more than minimum wage. John will never be able to
discharge any portion of the judgment by filing a Chapter
7 case. On the other hand, in a Chapter 13 case, John
can propose a 3 year bankruptcy plan that pays only a very
small portion of the judgment amount (perhaps as little
as $50 or $100 per month). He will receive a discharge
of the unpaid amount due under the judgment if he completes
his payments under the plan. |
11. Drunk
Drivers Causing Death or Injury. A person
can not discharge debts relating to death or personal injury
inflicted on another person while he was driving a motor vehicle intoxicated
on alcohol, drugs or other substances. The rule prevents the discharge
of civil damage awards for death or personal injuries inflicted by drunk
drivers. It applies in both Chapter 7 & 13 cases. It is known
as the "Madd Mom" rule because the organization known as "Mothers Against
Drunk Driving" lobbied Congress to enact it.
Index
12. Securities
Fraud or Securities Law Violations. A debtor
can not discharge a judgment, fine, penalty, restitution obligation
and settlement agreement relating to the following can not be discharged
in a Chapter 7 case:
► violations of any of the federal
or sate securities laws, regulations or orders;
► fraud, deceit, or manipulation
in connection with the purchase or sale of any security; and
Debts
relating to securities fraud and securities law violations can be
discharged without making full payment in a Chapter 13 case.
Index
13. Welfare
Payment Reimbursement Claims.
Index
14. Preserving Non-Dischargeable Debts.
Index
14.1. Automatic Non-Discharge.
Most of the non-dischargeable debts discussed above are automatically
not discharged by the bankruptcy filing. This means that the entry
of a discharge order will not release any debt of the type that
are automatically not dischargeable, and the creditor does not
need to file a lawsuit or take any other action to preserve the debt.
The following types of nondischargeable debts are automatically excepted
from discharge:
Index
► non-dischargeable tax claims
(see
Discharging Tax Claims in Bankruptcy);
► debts incurred to pay non-dischargeable
taxes (see
2. Debts Incurred to Pay NonDischargeable Federal
Taxes);
► child support (see
4. Alimony & Child Support);
► divorce decree debts (see
5. Divorce Decree Debts);
► student loans (see
6. Student Loans);
► civil and criminal fines, penalties
and criminal restitution (see
7. Fines, Penalties & Criminal Restitution);
► unlisted debts (see
8. Unlisted Creditors);
► willful and malicious injury to
another person - Chapter 13 cases only (see
10. Willful Injury to Persons or Property).
► drunk drivers causing death or
injury (see
11. Drunk Drivers Causing Death or Injury);
and
► securities fraud or securities
law violations (see
12. Securities Fraud or Securities Law Violations).
14.2. Discharge Contest
Required. The creditor must file a discharge
contest (a lawsuit) in bankruptcy court to preserve the following
types of non-dischargeable debts:
Index
► fraud claims (see
3. Fraud Claims);
► theft, conversion or breach of
fiduciary duty (see
9. Embezzlement, Theft or Breach of Fiduciary
Duty); and
► willful and malicious injury to
another person or property - Chapter 7 cases only (see
10. Willful Injury to Persons or Property).
The creditor must prove that the debt falls within one of these three
categories of non-dischargeable debts. The creditor must file the
discharge contest within 60 days after the creditor’s meeting was first
scheduled to take place. If the creditor fails to file the discharge
contest within the 60 day time period, his right to contest the discharge
will expire and the debt will be released.
Index
15. Chapter 13
- Super Discharge
The rules concerning the discharge of debts in bankruptcy are more liberal in Chapter 13 cases. A Chapter 13 debt discharge is commonly
known as a "super discharge" because the scope of the discharge is broader than the discharge given in Chapter 7 cases. In Chapter 13 cases,
all debts are dischargeable, potentially without any payment, except
for the following. If a debtor successfully completes his Chapter 13
plan, the following types of debts will not be discharged (released).
Index
► non-dischargeable tax claims
(see
Discharging Tax Claims in Bankruptcy);
► fraud claims (see
3. Fraud Claims);
► child support and alimony obligations
(both arrearages and ongoing obligations (see
4. Alimony & Child Support);
► student loans (see
6. Student Loans);
► restitution or a criminal fine
included in a sentence on the debtor’s conviction for a crime (see
7.2 Criminal Fines & Restitution);
► unlisted debts (see
8. Unlisted Creditors);
► theft, conversion or breach of
fiduciary duty (see
9. Embezzlement, Theft or Breach of Fiduciary
Duty);
► willful and malicious injury to
another person (see
10. Willful Injury to Persons or Property);
► drunk drivers causing death or
injury (see
11. Drunk Drivers Causing Death or Injury);
and
► welfare repayment obligations (see
12. Welfare Payment Reimbursement Claims).
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