A non-dischargeable debt is one that can’t be wiped out in a bankruptcy case. Even if the bankruptcy case is successful, the non-dischargeable debts remain legally enforceable
11 U.S.C. 523 lists those debts that are non-dischargeable. The list is a large one, but the debts that cannot be discharged include:
- any debt for employment taxes;
- debts for income taxes that are not older than statutory limits;
- for money, property, services, or an extension, renewal, or refinancing of credit, to the extent obtained by false pretenses, a false representation, or actual fraud, other than a statement respecting the debtor’s or an insider’s financial condition;
- debts owed to a single creditor and aggregating more than $500 for luxury goods or services incurred by an individual debtor on or within 90 days before the bankruptcy case was filed;
- cash advances aggregating more than $750 that are extensions of consumer credit under an open end credit plan obtained by an individual debtor on or within 70 days before the case was filed;
- debts that were not listed
- debts incurred through fraud or defalcation while acting in a fiduciary capacity, embezzlement, or larceny;
- debts for a domestic support obligation;
- debts for willful and malicious injury by the debtor to another entity or to the property of another entity;
- debts for a fine, penalty, or forfeiture payable to and for the benefit of a governmental unit, and is not compensation for actual pecuniary loss, other than a tax penalty;
- debts for an educational benefit overpayment or loan made, insured, or guaranteed by a governmental unit, or made under any program funded in whole or in part by a governmental unit or nonprofit institution;
- debts for an obligation to repay funds received as an educational benefit, scholarship, or stipend;
- debts for any other educational loan that is a qualified education loan under the US Bankruptcy Code;
- debts for death or personal injury caused by the debtor’s operation of a motor vehicle, vessel, or aircraft if such operation was unlawful because the debtor was intoxicated from using alcohol, a drug, or another substance;
- debts that was or could have been listed or scheduled by the debtor in a prior case concerning the debtor under this title or under the Bankruptcy Act in which the debtor waived discharge, or was denied a discharge under section 727 (a)(2), (3), (4), (5), (6), or (7) of this title, or under section 14c(1), (2), (3), (4), (6), or (7) of such Act;
- debts provided in any final judgment, unreviewable order, or consent order or decree entered in any court of the United States or of any State, issued by a Federal depository institutions regulatory agency, or contained in any settlement agreement entered into by the debtor, arising from any act of fraud or defalcation while acting in a fiduciary capacity committed with respect to any depository institution or insured credit union;
- debts for malicious or reckless failure to fulfill any commitment by the debtor to a Federal depository institutions regulatory agency to maintain the capital of an insured depository institution, except that this paragraph shall not extend any such commitment which would otherwise be terminated due to any act of such agency;
- debts for any payment of an order of restitution issued under title 18, United States Code;
- debts incurred to pay a non-dischargeable tax debt;
- debts incurred to pay fines or penalties imposed under Federal election law;
- debts to a spouse, former spouse, or child of the debtor and not of the kind described in paragraph (5) that is incurred by the debtor in the course of a divorce or separation or in connection with a separation agreement, divorce decree or other order of a court of record, or a determination made in accordance with State or territorial law by a governmental unit;
- debts for a fee or assessment that becomes due and payable after the order for relief to a membership association with respect to the debtor’s interest in a unit that has condominium ownership, in a share of a cooperative corporation, or a lot in a homeowners association, for as long as the debtor or the trustee has a legal, equitable, or possessory ownership interest in such unit, such corporation, or such lot, but nothing in this paragraph shall except from discharge the debt of a debtor for a membership association fee or assessment for a period arising before entry of the order for relief in a pending or subsequent bankruptcy case;
- debts for a fee imposed on a prisoner by any court for the filing of a case, motion, complaint, or appeal, or for other costs and expenses assessed with respect to such filing, regardless of an assertion of poverty by the debtor under subsection (b) or (f)(2) of section 1915 of title 28 (or a similar non-Federal law), or the debtor’s status as a prisoner, as defined in section 1915 (h) of title 28 (or a similar non-Federal law);
- debts owed to a pension, profit-sharing, stock bonus, or other plan established under section 401, 403, 408, 408A, 414, 457, or 501(c) of the Internal Revenue Code of 1986;
- debts for violations of federal securities laws.
Remember, the rules about discharge in Chapter 7 differ from those under Chapter 13. These differences may make it more attractive to seek relief under one type of bankruptcy or the other.
Photo courtesy of Racchio.
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