When a borrower or customer files for bankruptcy protection, the majority of his debts are discharged or eliminated. However, it is important for creditors to understand that certain debts are exempt from discharge under the law. In other words, the debtor remains liable to pay these debts when the bankruptcy case is over. The creditor is required to take affirmative action in the bankruptcy case to have the debt declared non-dischargeable. Examples of non-dischargeable debts include:
Fraud – If it is proven that the debtor incurred certain debts as the result of fraudulent activities or under false pretenses, the debts will be non-dischargeable. Typically, a creditor files a complaint alleging the fraud and a special hearing is held to determine whether fraud exists.
Credit Purchases – If the debtor buys luxury goods or services on credit, the resulting debt is not likely to be discharged, especially if the purchases were made within ninety days of the bankruptcy filing and the total amount of money owed to a single creditor is more than $500.
Taxes – Certain taxes cannot be discharged.
Child Support – The law provides that a debtor’s liability to pay alimony or child support payments cannot be discharged.
Student Loans – Most educational loans that are still outstanding in the debtor’s name are included in the category of non-dischargeable debts. However, there can be exceptions to this general rule.
Fines – Bankruptcy law does not allow a debtor to discharge certain fines associated with criminal acts, such as criminal restitution ordered by a court, traffic tickets, or any other such charges.
Drunk Driving Liability – If the debtor has been found guilty of driving while drunk (or under the influence of drugs) and causing an accident and a court has ordered the debtor to pay compensation to the injured person, the compensation liability is non- dischargeable.
If you need assistance objecting to a debt being discharged in a borrower or customer’s bankruptcy, contact Windtberg & Zdancewicz, PLC,to schedule an appointment!
The attorneys at Windtberg & Zdancewicz, PLC, provide clients with experienced legal representation. We are experienced in creditor’s rights including garnishments, charging orders, attachment, property execution, trustee’s sales, foreclosures, judgments, judgment collection, domestication of foreign judgments, and creditor’s issues in bankruptcy cases. If you need assistance, or are interested in learning more, please contact us at (480) 584-5660.