Discharge of Debt in Bankruptcy?

There Are Debts

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Not all debts are discharged in a bankruptcy. Debts discharged vary under each type of bankruptcy in the Bankruptcy Code. Section 523(a) of the Bankruptcy Code lists the different categories of debts that are not discharged in bankruptcy. There are 19 categories of debts that are exempt from discharge under chapters 7, 11, and 12, and there is a more limited list of exceptions for discharge under a Chapter 13.

Here are Some common questions asked about debts that are not discharged in bankruptcy:

What are the most common types of debts not discharged?

  • Debts not set forth in the lists and schedules the debtor must file for the bankruptcy court
  • Certain type of tax claims
  • Spousal or child support
  • Debts awarded for willful and malicious injuries to people or property
  • Debts obtained through certain government fines and penalties
  • Debts for student loans except for the cause of hardship
  • Debts for personal injury caused by operating a motor vehicle while intoxicated
  • Debts owed to certain tax-advantaged retirement plans
  • debts for certain types of homeowner association fees

What kinds of exemptions from discharge are not automatic?

Debts incurred by fraudulent means listed under 523 (a) (2) and (4); and debts incurred for willful and malicious injury by the debtor to another entity or to the property of another entity as listed in 523 (a) (6). Creditors must ask the court to determine that these debts are exempt from discharge, or the debts will not be granted an exemption under these sections.

Who can receive copies of the discharge besides the creditors?

The creditors will each be sent a copy of the discharge order, but the debtor and the debtor’s attorney can also receive copies. The creditors, when notified of the final order of discharge, will be informed that the debts owed them have been discharged. It will not list the debts exempt from discharge in the order.

The notice will also inform the creditors that they should not attempt any further collections and are warned any further attempt in collection efforts could subject them to punishment for contempt of court. Any failure by the bankruptcy court clerk to get a copy of the final discharge order to any creditor will not validate the discharge and legal responsibility of the creditors to vacate their efforts of collections.

Can a discharge be revoked?

A discharge can be revoked if the discharge was obtained fraudulently; if the discharge was obtained by any willful and malicious injury by the debtor to another entity or to a property; or if the filing debtor fails to explain any misstatements discovered in an audit or to provide documents for an audit. Unless certain circumstances prevail, a request to revoke a discharge must be made within one year of the discharge.

Are there any other conditions that may occur in bankruptcy to affect discharge?

Bankruptcy laws can be very complicated, and the list included in this article are not conclusive. There are other conditions that can occur in a bankruptcy that might affect a discharge. That is why it is wise to consult with a bankruptcy attorney when having to file for bankruptcy.

 

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