What are the Exceptions to Discharge?
Bankruptcy Code Section 523 governs the Exceptions to Discharge, meaning which debts cannot be eliminated by successful completion of a Chapter 7 Bankruptcy. Such debts can be Discharged through a Chapter 13 Bankruptcy if the debtor pays these debts in full through the Chapter 13 plan.
Bankruptcy Code Section 523(a)(1) states that a tax or customs duty is not dischargeable unless a number of criteria are met. The tax obligation must be at least three years due (including extensions) and the debtor must have filed his tax return at least two years ago. Secondly, the debtor cannot have made a fraudulent return or attempted to willfully evade such tax. The taxes must have been assessed more than 240 days before the filing of the petition. If the debtor negotiated an offer in compromise, the taxes must have been assessed more than 240 days plus 30 additional days before the Bankruptcy filing. If a stay of proceedings against collection of the tax was initiated, the debtor must wait 240 days plus an additional 90 days.
There are other Bankruptcy Laws relating to the Dischargeability of tax debts. Please confer with your Bankruptcy Attorney.
Bankruptcy Code Section 523(a)(2) states that money, property or services obtained by fraud or a false representation, are not Dischargeable under the Bankruptcy Code.
Consumer debts owed to a single creditor totaling more than $550.00 for luxury goods or services incurred by the debtor within 90 days before filing the Bankruptcy are presumed to be non dischargeable. Luxury goods or services do not include goods or services reasonably necessary for the support of the debtor or his dependents. Also, cash advances totaling more than $825.00 within 70 days before the Bankruptcy filing, are presumed to be non dischargeable.
Another exception to Discharge is for fraud while acting in a fiduciary capacity, embezzlement, or larceny. Domestic obligations are not dischargeable in Bankruptcy. Damages resulting from the willful and malicious injury by the debtor of another person or his property, are also not dischargeable in Bankruptcy.
Student loans are usually non dischargeable under Section 523(8)(A) of the Bankruptcy Code. However, student loans can be discharged if the debtor can prove “undue hardship”. There is a three part test to prove undue hardship. How to define undue hardship is an area of study in itself. Our office does have a number of clients who were able to Discharge their student loans.
Bankruptcy Code Section 523(a)(9) states that a debt incurred for the death or personal injury caused by the debtor’s operation of a motor vehicle, or other vessel, is non dischargeable if the debtor was intoxicated from using alcohol, a drug, or other substance.
The Bankruptcy Code and Laws have many other exceptions to Discharge but these are among the more prominent. Even if a debt is not specifically mentioned under the Bankruptcy Code Section 523 as an exception to Discharge, that debt may not be eliminated in Bankruptcy for other reasons.
For more information about exceptions to discharge and how Jay Well Legal Group can help you, contact us for a free consultation today.[/vc_column_text][/vc_column][vc_column width=”1/3″][vc_column_text][vfb id=3][/vc_column_text][/vc_column][/vc_row]