Filing for bankruptcy provides individuals with a fresh start while eliminating their debt. However, not all of your debt will be wiped clean upon receiving your Discharge Order. This means that when your bankruptcy case is closed debts that are not discharged in bankruptcy will remain.
Most people are aware that (1) student loans, (2) taxes and (3) domestic support obligations (child support, spousal support, etc.) are not affected by the bankruptcy case. Along with these debts section 523 of the United States Bankruptcy Code lists 19 different categories of debts that are not discharged in bankruptcy. Some of the most common that come up during client consultations include:
- Debts incurred by false pretenses, false representation, or actual fraud;
- Consumer debts owed to a single creditor in an amount more than $500.00 for luxury goods incurred within 90 days of the case filing;
- Cash advances aggregating more than $750.00 on or within 70 days of the case filing;
- Fines or penalties that are owed to a governmental unit (i.e. Court costs, fines);
- For death or personal injuries that are caused as a result of driving while intoxicated from using alcohol, a drug, or other substance; and
- For payment of an order of restitution.
While there are 19 categories of debts that are not discharged in bankruptcy, the most common issues I see are medical bills, credit cards, and pay day loans/cash advances.