Debts That Cannot Be Discharged in Bankruptcy

Former NBA star Dennis Rodman is currently in court trying to get his large child and spousal support payments reduced.  However, rumors that he is planning to file for bankruptcy may be just speculation since his domestic support obligations — including the nearly $1,000,000 he owes in back child support — cannot be discharged in bankruptcy.

When people file bankruptcy, many expect to have all of their debts discharged. However, not everyone gets a completely fresh start, since the law recognizes some creditors’ interests as non-dischargeable. The following list includes some of the debts that you still have to pay whether you file under Chapter 13 (debt readjustment) or Chapter 7 (liquidation):

  • Domestic support obligations.  Court-ordered payments for child and spousal support cannot be discharged. This includes all back child support.
  • Student loans. Student loans are not dischargeable unless you can prove undue hardship (e.g., permanent disability). While a Chapter 13 repayment plan allows the judge, rather than the lender, to determine payment amounts for 3-5 years, the debtor is still responsible for the balance at the end of that period.  A better option is to take advantage of the government’s “income contingent” or income-based payment plans, in which payments are based on your income level and the balance is forgiven after 25 years (10 if you work in the public sector).
  • Payments to the IRS.  Tax debts are not dischargeable unless certain time related tests are met.  Call our office to discuss whether your tax debts will be dischargeable in a bankruptcy..
  • Criminal restitution and citations.  If you have received a judgment against you in a personal injury lawsuit for driving under the influence (DUI) resulting in injury or wrongful death, this debt will not be discharged. Neither will any fines for violating the law, including traffic tickets.
  • Fraud. If a creditor claims that the debt was incurred by an act of fraud or deceit, a judge may decide not to discharge it.  Note that making cash advances or credit purchases before filing for bankruptcy may fall under this category.
  • Intentional torts.  This includes debts for willful or malicious property damage or injury, including sexual harassment damages.
  • Unscheduled debts.  If you neglect to list a debt on your bankruptcy schedule, or if you incur a debt after filing, it will remain yours to pay.  This is why it is important to make sure all creditors are listed in your bankruptcy.  Our office pulls credit reports for each person to help make sure all debts are listed.

A careful review of what assets and debts will remain with you after a bankruptcy is crucial in order to determine your future standard of living.  Call our office today for a consultation.

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