Some debts just follow you out of bankruptcy.
Not many but a few.
1. Family support
Regardless of what it’s called, court ordered payments for support of children or spouses
2. Recent taxes
Income taxes for tax years more than three years old, counting from when the return was due
3. Taxes still assessable
The IRS ability to assess additional tax according to tax law survives
4. Taxes for unfiled years
The clock doesn’t run on tax discharge until an honest return is filed.
5. Payroll taxes
The trust portion of payroll taxes, federal and state: that’s what the employer withholds from employee checks
6. Judgments for drunk driving
Liability for death or personal injury from impaired operation of a vehicle
7. Debts to spouse or child from divorce
Debts to your own lawyer do get wiped out
8. Student loans
Unless you file suit in the bankruptcy and prove repayment is an undue hardship
9. Money borrowed to pay non dischargeable tax
No paying taxes with a loan you want to discharge.
10. Penalties to governments
This covers fines, penalties and forfeitures that are intended to punish not compensate
Non dischargeable if….
Three additional categories of debts survive bankruptcy only if the affected creditor successfully jumps through some legal hoops in the bankruptcy case.
Debts incurred by fraud; debts for conversion or breach of fiduciary duty; and debts for deliberate injury to person or property require the victim to file suit and prove the operative facts.
There’s a short period for filing a non dischargeability action and the presumptions operate in favor of the debtor. But if the creditor can establish the bad behavior of the debtor that created the debt, public policy says we don’t want to shelter bad actors.
It’s important to understand that the debt must have been incurred by the bad behavior; just trying to evade payment of an honestly incurred debt doesn’t make it non dischargeable, in most instances.
Liens survive unless…
While a bankruptcy discharge wipes out your personal liability for discharged debts, any of your property that is impressed with a lien when you file bankruptcy continues to be liable for the debt.
Think your home loan: your discharge keeps the lender from suing you after bankruptcy for a money judgment, but it doesn’t keep the lender from foreclosing on your house if you don’t pay after bankruptcy..
After bankruptcy, as long as you continue to pay on a secured debt, the creditor is generally happy to take your money and leave you alone. If you change your mind, or further financial troubles loom, you can walk away from the liened property, losing only the property.
An experienced bankruptcy lawyer can walk you through the bankruptcy discharge and the landscape after your case is over.