Most people who file chapter 7 bankruptcy in New York only intend to discharge credit card debt because mortgages and auto loans are secured by houses and cars, respectively, so debtors must continue payment on them to prevent foreclosure or repossession. Generally, though, a chapter 7 discharge applies to all unsecured debts, but that doesn’t mean there are no exceptions. Looking at the form discharge order (Official Form 18) can give debtors a sense of what loans they can expect to not be discharged. There are 10 debts on the reverse side of the form.
(1) Debts for most taxes – Taxes are dischargeable under certain circumstances
(2) Debts incurred to pay most taxes
(3) Debts that are domestic support obligations – support for an ex-spouse, child support
(4) Debts for most student loans – Debtors must file an adversary proceeding against the creditor before filing bankruptcy to include a student loan in a petition.
(5) Debts for most fines, penalties, forfeitures, or criminal restitution obligations
(6) Debts for personal injuries or death caused by the debtor’s operation of a motor vehicle, vessel, or aircraft while intoxicated
(7) Some debts which were not properly listed by the debtor
(8) Debts that the bankruptcy court specifically has decided or will decide in this bankruptcy case are not discharged – Most often this happens when the debt was incurred fraudulently.
(9) Debts for which the debtor has given up the discharge protections by signing a reaffirmation agreement in compliance with the Bankruptcy Code requirements for reaffirmation of debts – In most cases this is an auto loan.
(10) Debts owed to certain pension, profit sharing, stock bonus, other retirement plans, or to the Thrift Savings Plan for federal employees for certain types of loans from these plans – This one does not come up often.
Notably, Official Form 18 (PDF) describes these as “some of the common debts” that aren’t discharged in a chapter 7 bankruptcy. There are clear exceptions, as noted above, so if you think your debt situation is complicated, then it’s worthwhile to sit down and talk with an experienced New York bankruptcy lawyer.
For answers to more questions about discharge, bankruptcy, the automatic stay, effective strategies for dealing with foreclosure, and protecting your assets in bankruptcy please feel free to contact experienced Chapter 7 Bankruptcy Lawyer Brooklyn NY Bruce Weiner for a free initial consultation.
