New Jersey Bankruptcy Lawyer Explains which specific type of debt may not be discharged in Chapter 7.
In a typical NJ. chapter 7 bankruptcy case, the debtor intends to discharge certain debt. A chapter 7 bankruptcy discharge means that the debtor is no longer personally liable and/or responsible to pay the debt. In other words, after a discharge, the creditor may never attempt to collect the money from the debtor. An exception to discharge means that a specific type of debt is not discharged and/or eliminated. If a debt is not discharged, the creditor may continue to pursue the debtor for the debt, after the completion of the bankruptcy case.
There are bankruptcy code sections that relate to the ”nondischargeability” of the whole case, including all debt. Under those code sections, if the debtor meets the criteria, he will be unable to proceed with his case and obtain any no discharge of any debt. 11 U.S.C. § 727 is the code section that prohibits a discharge of any debt under a chapter 7 bankruptcy case. However, this blog deals with the exceptions to the discharge of one debt and one creditor. Consequently, the debtor may obtain a discharge of all other debts.
If the creditor has a certain type of lien on property, the company, may possibly be permitted to pursue an action to take the collateral. Unsecured debt, such as credit card debt, does not involve any collateral and/or a lien on property. In a typical New Jersey chapter 7 bankruptcy case, the petition is filed to eliminate unsecured debt. The bankruptcy code provides a list of debts that are specifically “excepted” from a discharge
11 U.S.C, section 523 lists the types of debt that are “excepted” from discharge. Some of the sections of 523 include debt that is automatically “excepted” from discharge if certain criteria are met. There are other portions of section 523 that are only “excepted” from discharge, if the creditor proves certain facts, in court. The ladder scenario requires the creditor to file the appropriate court documents, pursue the process and prevail in court.
The following is a list of code sections that except debt from discharge without requiring the creditor to take any additional legal or court action.
11 U.S.C, section 523, (a)(1)(A) and (B) indicates the specific taxes that are “excepted” from discharge, based on specific criteria;
11 U.S.C, section 523, (a)(3)(A) and (B) excepts from discharge the debt owed to a creditor that was not properly listed on the petition and notified in sufficient time to file a proof of claim, in connection to an asset case;
11 U.S.C, section 523, (a)(5) reflects domestic support obligations are not dischargeable. Domestic Support Obligations are typically child support, alimony payments and other maintenance payments;
11 U.S.C, section 523, (a)(7)(A)(B) covers the types of fines, penalties and taxes that are due to a governmental unit. This subsection also includes the requirement to pay back certain funds to a governmental unit;
11 U.S.C, section 523, (a)(8)(A)(B) includes the inability to discharge student loans;
11 U.S.C, section 523, (a)(9) pertains to debt arising from the death or injury of a person caused by driving while unlawfully intoxicated;
11 U.S.C, section 523, (a)(10) is the debt from a creditor that was or should have been listed in a prior case, wherein the debtor was denied or waived his discharge.
11 U.S.C, section 523, (a)(13) is a debt regarding payment of restitution under Title 18 of the U.S. Code
11 U.S.C, section 523, (a)(14) is tax owed to the U.S. that is “nondischargeable”.
11 U.S.C, section 523, (a)(14)(A) is a tax owed to a governmental unit other than the US;
11 U.S.C, section 523, (a)(14)(B) is a debt that was incurred for fines or penalties in connection with a federal election law violation;
11 U.S.C, section 523, (a)(15) reflects a debt that is due to a spouse, former spouse or child in certain circumstances that is not deemed a Domestic Support Obligation;
11 U.S.C, section 523, (a)(16) is a debt that will be due to a membership association, condominium association, homeowners association and a cooperative corporation, under certain circumstances.
11 U.S.C, section 523, (a)(17) is a fee, cost, and expense that is imposed on a prisoner under specific situations.
11 U.S.C, section 523, (a)(18) (A) (B) pertains to a loan made against a specific retirement fund, such as a 401(k) and IRA, under the Employee Retirement Income Security Act of 1974.
Although additional legal action, by a garden state, chapter 7 bankruptcy attorney, is typically not required, regarding the above list, one should obtain a court order, confirming that a certain debt is dischargeable. Such action should prevent future issues.
Below is a list of debt that is “nondischareable”. However, typically, additional legal action must be pursued, in bankruptcy court, to prove certain required facts necessary to deem the debt “nondischargeable”:
11 U.S.C, section 523, (a)(1)(C) indicates that a tax in connection with fraud regarding the filing of a return is not dischargeable;
11 U.S.C, section 523, (a)(2)(A)(B) is a debt, property and/or service that was obtained or incurred by fraud;
11 U.S.C, section 523, (a)(2)(C)(i)(ii) is a consumer debt, for luxury goods, in excess of $675.00, which is incurred to one creditor, within ninety (90) days, prior to the bankruptcy filing. Additionally, cash advances in excess of $950.00 incurred to one creditor, within seventy (70) days prior to the bankruptcy filing, is non dischargeable;
11 U.S.C, section 523, (a)(4) is a debt incurred by committing fraud or misappropriation of funds, while in a fiduciary capacity regarding the handling of such funds;
11 U.S.C, section 523, (a)(6) pertains to debt caused by willful and malicious injury to a person, property or entity;
11 U.S.C, section 523, (a)(11) is debt incurred or caused by fraud or the misappropriation of funds, in certain circumstances, while in a fiduciary capacity, regarding a depository institution or insured credit union;
11 U.S.C, section 523, (a)(12) is debt incurred by malicious or reckless failure to maintain the required capital of a federal depository institution.
11 U.S.C, section 524, (c) pertains to a debt in which a debtor consents to exclude from discharge. Under these circumstances, the agreement must be filed with the court and the debtor must be provided with the correct disclosures;
11 U.S.C, section 524, (k) pertains to a Reaffirmation Agreement which is an agreement between the debtor and creditor that “excepts” a debt from discharge and requires the debtor to make payments to the creditor. This type of agreement typically relates to a debt that is secured by collateral, such as an automobile.
Contact the Garden State bankruptcy lawyer, Robert Manchel at 866 503 5644 to discuss your questions.