All Debts Discharged

Are all of the debts discharged?

Bankruptcy: not all debts discharged. The debts discharged vary under each chapter of the Bankruptcy Code. Section 523(a) of the Code specifically excepts various categories of debts from the discharge granted to individual debtors. Therefore, the debtor must still repay those debts after bankruptcy. Congress has determined that these types of debts are not dischargeable.  Public policy reasons do not allow the discharge of certain debts.  Debts incurred for drunk driving injuries to another is one example.

Chapters 7, 11, 12,  lists 19 categories of debt excepted from discharge. A more limited list of exceptions applies to cases under chapter 13.

Generally speaking, the exceptions to discharge apply automatically if the language prescribed by section 523(a) applies. The most common types of nondischargeable debts are certain types of tax claims, debts not set forth by the debtor on the lists and schedules the debtor must file with the court, debts for spousal or child support or alimony, debts for willful and malicious injuries to person or property, debts to governmental units for fines and penalties, debts for most government funded or guaranteed educational loans or benefit overpayments, debts for personal injury caused by the debtor’s operation of a motor vehicle while intoxicated, debts owed to certain tax-advantaged retirement plans, and debts for certain condominium or cooperative housing fees.

The types of debts described in sections 523(a)(2), (4), and (6).  Obligations obtained by fraud or maliciousness not automatically excepted from discharge. Creditors must ask the court to determine that these debts excepted from discharge. Discharge can apply to the debts listed in sections 523(a)(2), (4), and (6).  Only with the absence of an affirmative request by the creditor and the granting of the request by the court.

A slightly broader discharge of debts is available to a debtor in a chapter 13 case than in a chapter 7 case. Debts dischargeable in a chapter 13, but not in chapter 7.  This includes debts for willful and malicious injury to property, debts incurred to pay non-dischargeable tax obligations.  Also debts arising from property settlements in divorce or separation proceedings. Although a chapter 13 debtor generally receives a discharge only after completing all payments required by the court.  There are some limited circumstances under which the debtor may request the court to grant a “hardship discharge.”  Even though the debtor has failed to complete plan payments.

Such a discharge is available only to a certain debtors.  Failure to complete plan payments is due to circumstances beyond the debtor’s control. The scope of a chapter 13 “hardship discharge” is similar to that in a chapter 7 case. With regards to the types of debts that are excepted from the discharge. A hardship discharge also is available in chapter 12.  Failure to complete plan payments.  If due to “circumstances for which the debtor should not justly be held accountable.”

If you have specific questions please call Bucacci And Simonian at 508-673-9500 or visit our website.