Non-Dischargeable Debt
Non-dischargeable debt summary
Debts that are non-dischargeable can't be wiped out in bankruptcy.
Some debts that are non-dischargeable in Chapter 7 may be dischargeable in Chapter 13.
Some debts that are dischargeable can be made non-dischargeable if a creditor challenges them in bankruptcy court.
Non-dischargeable debt definition and meaning
Non-dischargeable debt is debt that you owe that can't be wiped out by filing bankruptcy . These debts are amounts that Congress has decided should be repaid, and you'll remain obligated to repay them under almost every circumstance.
Key concept:
A non-dischargeable debt can't be wiped out in a bankruptcy.
More about non-dischargeable debt
Congress determined that releasing consumers from certain types of debt would be unfair or bad for the general public. In general, these debts are non-dischargeable:
Debts not listed on the bankruptcy filing
Many types of taxes
Child support or alimony
Debts from divorce or separation that are owed to a child or ex-spouse
Fines or penalties owed to government agencies
Student loans except in very limited circumstances
Personal injury debts cause by drunk driving on your part
Debts arising out of tax-advantaged retirement plans
Condo or cooperative housing fee debts
Attorneys’ fees for child custody or support
Criminal restitution and other court fines or penalties
In addition, some debts can be challenged by creditors, and the judge can make them non-dischargeable.
Credit card charges for luxury goods exceeding $650 per creditors in the 90 days before you file
Debts obtained by fraud or under false pretenses
Debts from malicious or deliberate injuries to people or property
Debts incurred to pay non-dischargeable taxes aren't dischargeable in Chapter 7, although they are dischargeable in Chapter 13 . If you use a personal loan to pay off a student loan, for instance, the personal loan isn't eligible for discharge in a Chapter 7 bankruptcy.
Non-dischargeable debt: A comprehensive breakdown
If you have a lot of non-dischargeable debt, Chapter 13 might be a better choice for you than Chapter 7. The three scenarios below explain how a non-dischargeable past-due child support balance might be treated.
Suppose that you're filing Chapter 7 bankruptcy. You owe $10,000 in past-due child support and $4,000 in credit card debt. You turn over property worth $5,000 to the court. The child support debt is reduced by $5,000. The credit card balance is discharged and the credit card company gets nothing. You’ll still owe the remaining $5,000 in child support.
If you have no assets to surrender in Chapter 7, your credit card debt will be wiped out, but you’ll still owe the full $10,000 in child support. You could be aggressively pursued for repayment, and up to 60% of your wages could be garnished .
In Chapter 13, your monthly plan payment will be calculated to fully clear your non-dischargeable debts over five years (three years if you’re low-income). You might also end up paying some or all of your credit card debt.
Choosing Chapter 13 may be better than facing aggressive wage garnishment for the child support balance.
Non-Dischargeable Debt FAQs
Can you include marital debt in bankruptcy?
Do I need a lawyer to file for bankruptcy?
You don't need a lawyer to file bankruptcy, but you might want to hire one.
You could download the forms you need at the U.S. Courts website, and find which bankruptcy court to send them to. This may be a good option if you qualify for Chapter 7 and all of your assets are exempt. For instance, you may have a straightforward case if you don't own a home and all of your debt is on credit cards.
However, bankruptcy can be complex, and people who represent themselves are far less successful, on average, than people who hire a bankruptcy attorney. The court staff is not allowed to help or advise you.The U.S. Bankruptcy Court published a report in 2020 showing that only 55.6% of self-represented filers successfully had their debt discharged (forgiven), compared to 94.1% of filers who had an attorney. In courts where electronic self-help was available, the success rate was 84.2%.
If you make an error, it could be very costly. You could fail to get relief you're entitled to, or lose an asset that you could have kept. It's normal to say, “If I could afford to hire an attorney, I wouldn't need to file bankruptcy,” but this is a situation where finding a way could have long-term benefits.
Can bankruptcy help with student loan debt?
It's possible to discharge student loan debt in bankruptcy, but rare. You'd have to prove that you wouldn't be able to maintain even a minimal standard of living if you had to repay the debt. This is called "undue hardship." Because most student loans offer income-driven repayment plans, that's a hard burden to meet.
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