There are many reasons why individuals file for bankruptcy, typically Chapter 7.  For most, the ability to “start fresh” or “wipe the slate clean” is high on the list.  Sometimes, debt just becomes unmanageable and the only way to get back on track is through bankruptcy.  To be sure, there have been countless famous individuals who have filed for bankruptcy and gone on to be historically significant and successful.

Typically the fresh start is given at the end of the bankruptcy proceedings when remaining debt is discharged, meaning it is no longer collectable.  There are, however, a few types of debt that are not dischargeable during bankruptcy.  Those considering bankruptcy should take into consideration the proportion of their debt that may be non-dischargeable.  The following are a few of the types of debt that bankruptcy generally will not get rid of:

  • Student Loans – Student loans are notoriously non-dischargeable in most situations.  There are certain situations, tied to the type of institution attended and severity of the hardship being faced by the individual declaring bankruptcy, where such a loan might be dischargeable.
  • Taxes – The government usually won’t grant individuals relief from tax obligations, including tax liens. However, some taxes may be dischargable.
  • Certain Judgments – Some court judgments are not dischargeable; generally they are the judgments that are tied to intentional or malicious conduct.  For example, Bankruptcy Code Section 523(a)(6) states that debt resulting from “willful and malicious injury by the debtor to another entity or to the property of another entity” is not dischargeable.  The idea is that people who intentionally harm others should not be able to escape liability simply by declaring bankruptcy.  Determining whether a judgment is dischargeable can be confusing, and we can help you make that determination.
  • Support Obligations – Money owed for child or spousal support is typically non-dischargeable.  However, if a substantial change in circumstances, such as a loss of a job, has led to difficulty paying your support obligations, the Semmes Law Firm may be able to help you obtain a modification relieving some of the burden.  In addition to bankruptcy, Semmes Law Firm represents clients in Alabama family law cases.
  • Unscheduled Debts – When declaring bankruptcy, an individual is required to file with the court a schedule of their creditors. The creditors will then receive notice of the bankruptcy, allowing them to participate in the proceedings and attempt to protect the debt they are owed.  If a creditor is left off of the schedule, the debt owed to them typically will not be discharged.

These debts should be considered, but just because you have some debt that is non-dischargeable does not mean that bankruptcy is unavailable or a bad decision.  The decision whether to file individual bankruptcy is a difficult one that involves weighing a number of legal and practical issues.  Also, the law is nuanced, and there are certain exceptions whereby debt that usually isn’t dischargeable can be discharged.

The attorneys at Semmes Law Firm have the experience necessary to help you make the decision to file for bankruptcy.  Contact us today to learn more about your options.