Non-Dis-chargeable Debts in Chapter 7 Bankruptcy
For many people receiving collection notices, harassing phone calls, or notices that they are being sued by creditors, filing for bankruptcy can end the worry and bother. A bankruptcy, whether a Chapter 7 or Chapter 13, eventually wipes away all or most of the debts held by an individual. However, there are certain types of obligations that not even bankruptcy can eliminate. These are referred to as “non-dischargeable” debts. The four most common types of non-dischargeable debts are: taxes, student loans, court fines and fees, and domestic support obligations. They are automatically non-dischargeable.
Taxes in Oklahoma Bankruptcy
Tax debts, whether federal or state, are generally non-dis-chargeable. This includes both back taxes and taxes which have not yet been filed. Under very specific circumstances, a federal income tax debt could be discharged, but these are extremely rare. The debt must be more than five years old, and the debtor must have paid all subsequent taxes in full, on time, with no extensions. It should also be noted that because bankruptcy does not discharge tax debts, it also cannot get rid of tax liens against property.
Any form of education loan that is made, guaranteed, insured, or funded by a government agency or commercial entity is non-dischargeable. This rule includes both the normal government student loans, such as Stafford or Graduate Plus loans, as well as private loans from banks and other lending institutions. It also includes any sort of obligation or promise to repay a nonprofit institution of higher education for any sort of education benefit, scholarship, or stipend owed by the debtor.
There is an exception to this rule: the debts are dischargeable if they impose an “undue hardship” on the debtor. Unfortunately, the court decisions defining what qualifies as an “undue hardship” are extremely narrow. Essentially, only a debtor who is fully disabled and incapable of earning money through work can argue for discharge of student loans. If you are fully disabled, your only source of income is government benefits (social security, disability, food stamps, or some other form) and you have student loan debt, ask your bankruptcy attorney about the feasibility of arguing for discharge.
Any and all obligations owed to a governmental unit due to a fine, penalty, or forfeiture are non-dischargeable. This includes things like traffic tickets, fines issued by a court or government office, and asset forfeitures due to criminal conviction. It does not include monetary judgments levied against the debtor in civil court, lawyer fees, or other ancillary charges.
Domestic Support Obligations in Oklahoma Bankruptcy
Debts arising from failure to pay domestic support are non-dischargeable. Domestic support obligations include alimony, child support, or property settlements arising from divorce, separation, paternity, or other family law case. This applies whether the debt is owed directly to a former spouse, to a child, to the custodial parent of a child, or to a government agency such as DHS.
Other Types of Non-Dischargeable Debts
Outside of the four most common, there are a few other types of debt that are considered non-dischargeable. In most cases, however, the creditor in question must file an objection to the discharge and the court must then rule on that objection. These cases include:
Civil liability arising from willful or malicious injury to another person or property.
Civil liability arising from death, injury, or property destruction caused while operating a motor vehicle, watercraft, or aircraft while intoxicated.
Liabilities for obtaining money, property, or services by false representation or fraud, embezzlement, and/or larceny.
Treble damages awarded on account of debtor’s fraud.
Cash advances or credit card purchases exceeding $875 in the 70 days before filing bankruptcy.
Contact a Tulsa Oklahoma Bankruptcy Attorney
If you are considering bankruptcy and you believe you have one or more of these types of debts, you should consult with a Tulsa Oklahoma bankruptcy attorney as they can give you more information and options.