What Debts Can’t Be Discharged Through Bankruptcy?

If you feel your drowning in debt, you may see bankruptcy as your best option. If you seek Chapter 7 bankruptcy, you can get nearly all of your debts discharged. With a Chapter 13 bankruptcy, you can reorganize your debt and reduce debts. However, bankruptcy won’t discharge some debts, and some are difficult to discharge in bankruptcy.

U.S. bankruptcy code doesn’t allow for discharging these type of debts:

  • Spousal support or alimony
  • Some unpaid taxes, such as tax liens (you may be able to discharge some local, state or federal taxes if they date back from several years ago)
  • Debts for willful and malicious injuries to another person
  • Debts for injuring another person while driving under the influence of drugs or alcohol
  • Debts you failed to list in your bankruptcy filing

Student loan debt is difficult to discharge with bankruptcy. You must show paying it back will cause you or your dependents undue hardship.

One misconception about filing bankruptcy is that filers will lose their home in the process. You are allowed to keep $145,425 of equity in a home. So, with a Chapter 7 bankruptcy, you are likely to keep your home as long as you don’t have more than $145,425 in it.

Even if you can’t discharge all your debt in bankruptcy, it still might be the best option for you. With bankruptcy, you can escape overwhelming debt and begin a fresh financial start.