Chapter 7 bankruptcy is a welcome relief for most people who feel crushed under the weight of their debt. This type of bankruptcy wipes out, or “discharges”, most debts. This allows you to get on with your life with a clean slate.
There are some types of debt, however, that are not dischargeable under Chapter 7 bankruptcy law.
According to FindLaw, most student loans are not dischargeable during bankruptcy. In cases where repayment of the loan would cause undue hardship, however, there may be an exception.
Family law obligations
Payments for child support or spousal support will continue throughout bankruptcy, and afterward. If you are filing for bankruptcy, however, you may wish to see if a judge can modify your payments to a more reasonable amount.
Additionally, if you owe a settlement due to a divorce, this sum will not see a discharge. Again, some exceptions may exist if you simply cannot pay the settlement.
Debts from criminal activity
Any money you owe as a result of criminal activity will probably not see discharge. This includes debts due to negligence, fraud or other malicious activities.
Luxury goods or cash advances
In certain cases, cash advance debt or luxury good debt will remain after bankruptcy. It usually depends on when you made the purchase. For example, if you file for bankruptcy and immediately receive a cash advance afterward, the judge may decide that you keep that debt. Luxury goods and services that you buy right before bankruptcy may be subject to this decision as well.
Most people filing for bankruptcy must only worry about one or two of these items when filing.