Consumer Bankruptcy:

Debts That Cannot Be Discharged

Under the new bankruptcy law, the list of non-dischargeable debts has increased. Debts that cannot be discharged by bankruptcy now include:
 
-Domestic Support Obligations: Whether alimony, support payments, or a property settlement, none of these debts can be discharged.
 
-Privately Funded Student Loans: Like loans guaranteed, made, or funded by a government agency or non-profit institution, these loans are not dischargeable, unless the debtor can demonstrate that they inflict undue hardship.
 
-Credit Card Transactions Presumed Fraudulent: As with the former bankruptcy law, specific types of credit card transactions made right before filing for bankruptcy are automatically categorized as fraud and consequently cannot be discharged. However, the debtor can attempt to prove the assumption of fraud to be false. The specific type of transactions affect by this are on luxury goods and/or services that total more than $500 within the 90 days preceding the filing as well as cash advances of $750 or greater within the preceding 70 days.
 
-Debts Incurred to Pay Non-dischargeable Taxes: Any debt that was incurred in order to pay off a non-dischargeable debt to a government unit (not only the US, as with the old bankruptcy law) cannot be discharged. The impact of this primarily affects those who pay taxes with credit cards.
 
-Fines and Penalties- Debts that are the result of fines or penalties because of the violation of federal election laws are no longer dischargeable.
 
-Qualified Retirement Plans- Debts to qualified retirement plans can no longer be discharged.
 
It used to be possible to discharge taxes that returns were not filed for, or for which a fraudulent return was filed, or which was the result of fraudulent actions or defalcation. Under Chapter 13, this was referred to as the “super discharge,” and its scope has been considerably reduced by the new bankruptcy law. It is still technically possible to discharge a debt for willful and malicious injury to person or property, debts involving willful or malicious injury causing personal injury or death to an individual cannot be discharged.

 

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