Chapter 7 Bankruptcy: 3 Debts Which Are Never Dischargeable

Right now, as you read this blog, there are millions of Americans out there who are struggling to pay off their debts. They have fallen behind for one reason or another. Perhaps they lost their job or fell severely ill. Whatever the reason, for those who are trapped under a mountain of debt, filing bankruptcy may be the best possible solution — even if it means one must rebuild credit.

Chapter 7 bankruptcy is the most common type of bankruptcy for individuals, and it usually results in the liquidation of most of your existing assets. There are pros and cons that must be weighed depending on your unique circumstances, but generally speaking, Chapter 7 bankruptcy is a tool which allows you to discharge most of your debts so that you will never have to pay them.

However, there are certain types of debt which can never be discharged in bankruptcy. In every Chapter 7 bankruptcy case, the courts will decide which debts will be forgiven and which will remain after your bankruptcy filing  is completed. The following three types of debt will almost never be discharged in bankruptcy, and you will still be required to pay them off in the future.

1) Alimony and child support debts

Any debts that you have accrued from unpaid alimony or child support will follow you through a Chapter 7 bankruptcy. These court-ordered payments which usually result from a divorce cannot be forgiven, and your failure to pay could eventually result in criminal charges.

2) Criminal Restitution

Another non-dischargeable debt is one which resulted from you being forced to pay restitution for some sort of criminal actions. Oftentimes, when you commit a crime or lose a personal injury lawsuit which resulted from intoxicated driving, the court will require you to pay the victim or the government financial restitution as punishment. If you have fallen behind on paying those debts, you cannot have them liquidated in a Chapter 7 bankruptcy.

3) Fines and penalties owed to government agencies

Do you owe a mountain of debt for unpaid taxes to the IRS? Are you on the hook to pay back fines and penalties to some other government agency? Unfortunately, the government wants to ensure that it can collect on those debts and will not allow you to utilize bankruptcy as a means of discharging it. There are a few exceptions to this general rule, so you will want to consult an experienced local bankruptcy attorney to analyze your particular circumstances.

If you are struggling with your finances as a direct result of any of these aforementioned debts, filing for Chapter 7 bankruptcy may not be in your best interests since it will have little impact on your obligation to pay them back. However, you should always consult with a knowledgeable bankruptcy attorney to discuss your options and figure out whether any type of bankruptcy or bankruptcy alternatives could be a viable option to help you. Contact Maxwell Dunn Law today to learn how we can help.