Filing for bankruptcy can majorly improve your financial standing — but some things don’t go away when you file. These debts are called “non-dischargeable,” which means you still owe them, no matter what happens in court.
We’ll help you understand which debts stick around, why they’re different and what you can do next if you’re dealing with them.
Common Non-Dischargeable Debts
Some debts are protected by law and can’t be wiped out in bankruptcy. The most common ones include:
- Child Support and Alimony
The care and maintenance of the children you’re responsible for is a cost you cannot discharge during bankruptcy. If you fall behind, the total you owe can grow quickly and lead to other legal problems.
- Most Student Loans
In most cases, student loans do not get erased in bankruptcy, no matter if they’re private or federal. The rules make it hard to walk away from student loan debt, even when you’re struggling.
- Recent Tax Bills
Federal, state and local income taxes from the recent past typically do not get cleared during the bankruptcy process. The IRS and state tax agencies have strong legal tools at their disposal, so make sure you catch up on these before they move against you to collect.
- Court Fines or Injury Judgments
If a court orders you to pay a fine, fee or a personal injury claim (like from a DUI), those debts typically stay. Remember: Bankruptcy doesn’t change court penalties.
Possible Exceptions to Bankruptcy-Expempt Debts
In rare cases, some of these debts may be discharged. But it’s best to not count on it — any exceptions to the rule come with scratch legal requirements and extra steps.
Student Loans
Some student loans may qualify for discharge if you can prove that repaying them would cause “undue hardship.” To claim this, you need to prove in court that you cannot maintain a basic standard of living while repaying the loans, your situation is unlikely to improve and that you’ve tried — and failed — to repay your debts.
Typically, attempts to discharge student loan debts require a separate legal action. These cases can be tricky, so it’s always a good idea to consult with a lawyer before pursuing student loan discharge during bankruptcy.
Older Tax Debts
Some income taxes can be discharged if they meet specific rules. The debt must be old enough, filed correctly and meet other timing tests. This does not apply to payroll or fraud-related taxes.
Why You Need to Pay Attention to Non-Dischargeable Debts
When working through bankruptcy, these non-dischargeable debts can throw a major wrench in your future financial plans. These debts may not offer flexible repayment terms, while non-payment can lead to wage garnishment or frozen bank accounts. Creditors can even restart collection efforts once your bankruptcy case ends. So do yourself a solid and focus on getting a plan in place early to deal with these debts.
How to Manage Non-Dischargeable Debts
Like all financial matters, making a plan rooted in your real budget is the best course of action.
Start by listing what’s still owed and when payments are due. Then review your income and spending to see what’s realistic. You may need to adjust your monthly budget or cut back in a few areas to stay current.
You might also find a certified credit counselor, financial advisor or legal expert to help you review options based on the type of debt and your overall situation. Many offer free or low-cost support — so take advantage of their expertise as your situation requires.
Bankruptcy isn’t easy, but you’re moving in the right direction. Keep up the good work!