If you are considering bankruptcy, you may want to know which debts you will still have to pay afterward. Bankruptcy can eliminate many debts, but some obligations survive the discharge. Knowing which debts may remain can help you prepare for your finances after bankruptcy.
Which debts generally survive bankruptcy?
Some debts generally remain the debtor’s burden after bankruptcy. These can include:
- Domestic support obligations, such as child support and alimony
- Certain tax debts, depending on when the tax was due, when the return was filed and other factors
- Most student loans, unless the debtor proves undue hardship
- Certain fraud-related debts
- Certain government fines and penalties
- Certain criminal restitution obligations
- Certain debts from willful and malicious injury
Not every debt in these categories is barred from discharge. For example, a creditor may need to ask the bankruptcy court to rule on certain fraud-related debts. Some tax debts may also be dischargeable based on timing and other factors. The U.S. Courts’ bankruptcy guidance explains how discharge rules affect different debts.
Can discharge vary between bankruptcy chapters?
The type of bankruptcy you file can affect which debts are discharged. Chapter 13 can provide a broader discharge than Chapter 7 in some cases. Some property-damage debts that remain nondischargeable in Chapter 7 may become dischargeable after you complete a Chapter 13 plan. Other debts, including domestic support, most student loans and certain criminal restitution, generally remain nondischargeable.
Chapter 13 may also help you cure defaults on long-term secured debts, such as mortgage arrears, through a court-approved plan while keeping up with ongoing payments. You generally receive a Chapter 13 discharge after completing the plan and meeting applicable requirements. The U.S. Courts’ Chapter 13 guidance provides more detail.
What happens to debts that survive bankruptcy?
A discharge generally ends your personal liability for covered debts. Creditors generally cannot continue collecting those debts from you. Nondischargeable debts, however, remain your responsibility.
A discharge generally does not remove a valid lien against property securing a debt. A creditor may still enforce the lien after your personal liability ends. Knowing this distinction can help you avoid unexpected problems with your property after bankruptcy.
How can you plan for obligations that remain?
Before you file, make a list of your debts and identify which ones may survive bankruptcy. Knowing what you may still owe can help you plan for payments and other financial obligations after your case ends.
If you are facing bankruptcy in West Virginia, a bankruptcy attorney can review your debts, explain which rules may apply and help you plan for what remains.
