When facing financial turmoil, many turn to bankruptcy as a lifeline. It offers a chance to start fresh and free oneself from the shackles of overwhelming debt. However, it’s essential to remember that not all debts can be erased through bankruptcy. Here’s a breakdown of some debts that stand firm, and the reasons why.

Student Loans: The Weight of Education

Most student loans, especially federal ones, remain steadfast against bankruptcy. While it might seem harsh, there’s a rationale behind this. The idea is to deter individuals from accumulating massive educational debt and then seeking an easy way out. However, it’s worth noting that while difficult, it’s not impossible. 

In specific cases, if someone can prove “undue hardship,” such as a severe disability preventing employment, they might get these loans discharged. This is more common under Chapter 7 than Chapter 13.

Child Support and Alimony: Responsibilities That Stand

Both child support and alimony are non-dischargeable, regardless of whether you file under Chapter 7 or Chapter 13. These debts exist to ensure that children and former spouses don’t bear the financial brunt of a divorce or separation. As these obligations are viewed as a primary responsibility, the law makes it clear that one cannot escape them through bankruptcy.

Tax Debts: The Persistent Collector

When it comes to taxes, some can be discharged in bankruptcy, but others can’t. Tax debts, especially those less than three years old, are generally non-dischargeable. The reason? It’s to stop individuals from evading tax responsibilities by declaring bankruptcy. If you’re considering bankruptcy to handle tax debts, be sure to get advice, as the discharge ability often hinges on intricate details, such as the type of tax, how old the debt is, and whether tax returns were filed.

Court Fines and Penalties: Paying for Past Mistakes

If you owe fines or penalties to government agencies, erasing them through bankruptcy might not be an option. This rule is in place to ensure that those who break the law don’t get an easy way out of their penalties. While Chapter 7 won’t offer any relief from these fines, Chapter 13 might allow you to pay them off over time, but they won’t be discharged.

Personal Injury or Death Judgments From DUIs: Accountability First

Debts from personal injury or death judgments stemming from driving under the influence cases remain non-dischargeable. It stands as a stern reminder of the seriousness of DUI offenses and ensures that those responsible face the financial consequences of their actions. Both Chapter 7 and Chapter 13 uphold this rule.

Homeowner Association Fees: The Dues You Still Owe

Even if you file for bankruptcy, any homeowner association (HOA) fees or condo assessments that come due after filing remains your responsibility, especially if you continue to live in the property. The logic here is that as long as you benefit from the community services, you should contribute to its upkeep. 

While pre-bankruptcy dues might get discharged under Chapter 7, the post-petition fees do not. In Chapter 13, while you can pay back overdue fees over time, any new charges after filing should be paid promptly.

Certain Unlisted Debts: The Oversight That Costs

When filing for bankruptcy, it’s crucial to list all your debts. Fail to do so, and you might find yourself still owing those unlisted debts, especially in no-asset Chapter 7 cases where the creditors get no distribution. The rationale is straightforward: creditors should get a fair chance to stake their claim. However, if you inadvertently leave out a debt in a Chapter 13 filing, there’s a possibility of having it discharged if the oversight was genuinely unintentional.

Filing for bankruptcy can provide a much-needed financial reset, but it’s not an all-encompassing solution. Knowing which debts won’t budge in bankruptcy is crucial for setting realistic expectations and planning your financial recovery. If you’re contemplating bankruptcy, always consult with us at North Metro Litigators to guide you through the intricacies of the process and ensure you make well-informed decisions.