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Chapter 7 Bankruptcy
- Nondischargeable Debts
Consumer Bankruptcy will not discharge all debts.
Some debts will survive the bankruptcy process and are as valid and
collectable as they were prior to the bankruptcy. Under the bankruptcy
laws, 12 major categories of debts may turn out to be nondischargeable
unless the debts fits into a narrow exception to the rule. These debts
are:
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Debts
you don't list in your bankruptcy filings (11 U.S.C. 523(a)(3)). |
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Student
loans unless repayment would cause you undue hardship. (11
U.S.C.
523(a)(8)). |
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Most
federal, state and local taxes (11 U.S.C. 523(a)(1) and any money
borrowed on a credit card to pay those taxes (11 U.S.C. 523 (a)(14)). |
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Child
support and alimony and debts in the nature of support (11 U.S.C. 523
(a)(5) and 523 (a)(18)). |
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Fines
or restitution (to the court or victim) imposed in a criminal-type
proceeding (11 U.S.C. 523 (a)(7) and 18 U.S.C. 3613). |
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Fees
imposed by a court for the filing of a case, motion, complaint or
appeal or for other costs and expenses assessed with such filing (11
U.S.C. 523 (a)(17)). |
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Debts
resulting from intoxicated driving (11 U.S.C. 523 (a)(9)). |
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Debts
you couldn't discharge in a previous bankruptcy that was dismissed due
to fraud or misfeasance (11 U.S.C. 523 (a)(10)). |
To get any of these debts discharged,
you have to file a "Complaint to Determine Dischargeability" of
a Debt with the bankruptcy court and then show, in court, that your debt
isn't covered by the general rules which say that these debts are not
dischargeable. This is an adversary proceeding.
In addition, there are four categories
of debts which will be discharged unless the creditor objects to
dischargeablity. These are:
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Debts
incurred on the basis of fraudulent acts (11 U.S.C. 523 (a)(2)). |
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Debts
from willful and malicious injury to another or another's property (11
U.S.C. 523 (a)(6)) - an intentional tort (conversion, assault,
battery, etc. . .). |
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Debts
from embezzlement, larceny or breach of trust (fiduciary duty)(11
U.S.C. 523(a)(4)). |
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Debts
arising from a marital settlement agreement or divorce decree (11
U.S.C. 523 (a)(15)). |
If you have a debt which fits under
one of these four categories, your best approach is simply to do nothing
and hope the creditor doesn't come forward. If the creditor does object,
you will have to respond if you want the debt to be discharged.
On the bright side, filing for bankruptcy will remove
most of the burdens of debt from you. You will then be able to more
readily pay any of the debts listed above. Further, some of these debts
are negotiable.
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