There are Non-Dischargeable Debts in Bankruptcy Law

California Non-Dischargeable Debts

Liquidating Assets to Pay Debt

A Chapter 7 bankruptcy is often referred to as “Fresh Start” because it discharges your debts through a liquidation of your nonexempt assets and uses the proceeds to pay creditors in accordance with the provisions of the Bankruptcy Code. The Bankruptcy Code does allow you to keep certain Exempt Property, but the court-assigned trustee will liquidate all assets representing non-dischargeable debts and distribute the proceeds to your creditors. This could lead to the loss of property under Chapter 7 filing.

Non-Dischargeable Debts

The following debts ARE NOT dischargeable in either Chapter 7 or Chapter 13 California bankruptcies. After a Chapter 7 discharge, you will still be responsible for repaying these debts. If you file under Chapter 13, these non-dischargeable debts must be included in your Repayment Plan and any remaining balance at the end of your case will still be owed, plus any accumulated interest.

  1. Back child support, alimony obligations and other debts dedicated to family support.
  2. Debts for personal injury or death caused by operation of a motor vehicle while intoxicated.
  3. Most student loans unless you can establish it would be an undue hardship for you to repay.
  4. Fines and penalties for violating the law, including traffic tickets and criminal restitution.
  5. Recent income tax debts (within 3 years) and all other tax debts.
  6. Debts not listed or scheduled in bankruptcy case, which did not allow creditor sufficient time to file a proof of claim.

These additional non-dischargeable debts may be declared by the bankruptcy judge if a creditor brings a proceeding in bankruptcy court:

  1. Debt resulting from false pretenses, fraud, and false misrepresentation.
  2. Credit purchases of $1,150 or more for luxury goods or services made within 60 days of filing.
  3. Loans or cash advances of $1,150 or more taken within 60 days of filing.
  4. Debts from willful or malicious injury to another person or another person’s property.
  5. Debts for fraud in a fiduciary capacity, embezzlement, or larceny.
  6. Debts owed to a former spouse or child as part of divorce or separation.

Life After Chapter 7 Bankruptcy

Working through a California Chapter 7 bankruptcy can be a complicated process, especially when you have debts that are unlikely to be discharged. Call (619) 678-1134 to schedule your initial consultation with San Diego Chapter 7 bankruptcy attorney Chris Bush. He can discuss the implications of any non-dischargeable debt you may have and ensure that your filing proceeds in the most advantageous way possible for your circumstances.