The short answer is no. Not all debts are discharged in bankruptcy. While most debts will be discharged, there are certain types of debts that may or may not be discharged. These debts include the following broad categories:
- Debts that bankruptcy will never discharge.
- Debts that are only discharged in certain situations.
- Debts that will be forgiven unless a creditor objects and can prove you acted in a manner that would make the debt unable to be discharged.
- Debts that cannot be forgiven due to procedural reasons, such as a mistake on your part or timing.
Debts That Will Never be Discharged
Debts that fall into this category include spousal support, also called alimony, child support, criminal restitution and fines, and claims that resulted due to a drunk driving accident. There are some situations that the debt may sound like it will be included in this category, but due to its circumstances may still be discharged through the bankruptcy. Your attorney can help you understand these situations.
For example, criminal fines that are considered debts may sound like they fit under this category. However, if they are traffic infractions, they may be treated like a civil debt instead of criminal and therefore subject to debt forgiveness.
Debts Forgiven with Certain Conditions
Students loans and income taxes usually fall into this category. Federal and state income taxes can be discharged completely just like other types of debt as long as there has been enough time passed between the time the return was submitted, when it was due, and when the bankruptcy is filed. This prevents you from willfully defeating or evading income tax.
For a student loan to be discharged in bankruptcy it must meet the condition of causing you undue hardship. While this may sound simple to meet, this condition can actually be much harder to prove than expected.
Debts Forgiven Unless Objected by a Creditor
The bad behavior that the creditor must prove is fairly narrow and specific, so it will not apply to most people. This behavior usually involves misrepresentation, fraud, embezzlement, intentional harm to the creditor or their property, or theft.
Debts Not Forgiven Due to Procedural Issues
This covers two types of debt. The first type of debt are those debts that are obtained after you file for bankruptcy. Most creditors will not allow you to open a new line of credit once you file bankruptcy, but it can happen. The second is debt that is not scheduled or listed in your bankruptcy. So, you need to be certain you tell your attorney about all your debt and it gets listed in your case or it will not be discharged.
Contact an Experienced Attorney Today
If you are considering bankruptcy and would like to know more about whether your debts will be discharged or not, contact the attorneys at Bankruptcy Law Center today to schedule a consultation. We will help you understand more about your specific debt and whether bankruptcy is the best option for you.