The characterization of your debts is important as you proceed with your bankruptcy, because this can determine whether or not you will be released from personal liability on your debts. In this first part of a two-part series, our Bryan bankruptcy attorneys will explain which debts are not dischargeable in a bankruptcy.
In a bankruptcy case, debts are classified either as dischargeable or non-dischargeable. If a debt is non-dischargeable, that means that it cannot be eliminated by bankruptcy. Within the category of non-dischargeable debts, there are two sub-categories: (1) debts that are automatically deemed as non-dischargeable because of federal statute, and (2) debts that the courts decide are non-dischargeable.
Federal statute lists the following debts as non-dischargeable:
• Taxes that have priority (this includes any debt that you incur in order to pay taxes);
• Debts incurred as a result of false pretenses, fraud, or false financial statements;
• Debt you owe to a single creditor for: (a) luxury items or services that combine to a total of over $600, incurred within 90 days before the Order for Relief; or (b) credit extensions in the form of cash advances, totaling over $875 and incurred within 70 days before the Order for Relief;
• Any debt that hasn’t been listed on the schedule of liabilities in time to sufficiently allow for a timely filing of a proof of claim (unless the creditor had actual knowledge of the case in time for the filing);
• Debt that you, while acting in a fiduciary capacity, incurred as a result of fraud, embezzlement, or larceny;
• Alimony or child support that you owe;
• Your debt that arose out of your willful infliction of injury to another person or to the property of another person;
• Debt incurred so you could pay a fine or penalty to the government for the nonpayment of taxes (if the tax is determined to be non-dischargeable and it was incurred three years before the filing of the bankruptcy petition).
If you’re thinking about filing for bankruptcy, our bankruptcy attorneys at the Peterson Law Group can help. Fill out the form on this page, or call 979-703-7014 for an initial evaluation of your case at no cost to you.