Chapter 7 Discharge of Debts in U.S. Bankruptcy Courts
A discharge is a release of a debtor from personal liability for certain dischargeable debts. Discharges release debtors from personal liability, further payments and collection listed particular debts known as "dischargeable debts." A discharge also prohibits creditors from communicating with the debtor regarding the debt, including telephone calls, letters and personal contact.
Not all debts are dischargeable by U.S. bankruptcy courts
In general, individual liability for credit cards, personal loans, contracts, leases, automobile loans, appliance loans and home mortgages can be discharged through a Chapter 7 cases. Many other kinds of liabilities are dischargeable as well.
In a few circumstances, U.S. bankruptcy courts can not grant a discharge. The rationale is simple: a debtor's fresh start is intended to eliminate liability for consensual debts accepted by lenders, merchants and creditors. Other debts, those which where forced upon others or created by operation of law, can not be eliminated through a Chapter 7 discharge.
Debts which U.S. bankruptcy courts can not discharge
According to 11 U.S.C. 523, a discharge from U.S. bankruptcy courts does not discharge the following debts (subject to limited exceptions):
- Taxes and customs duties which have been assessed;
- Taxes which have not been assessed based upon the failure to file a tax return;
- Taxes due upon a late filed return, payable within 2 years of filing the petition can not be discharged by U.S. bankruptcy courts;
- Taxes properly due but withheld based upon misrepresentation or fraud;
- Credit obtained by false representations or fraud;
- U.S. bankruptcy courts can not discharge debt for luxury goods purchased within 60 days of filing a petition;
- Cash advances received within 60 days of filing a petition;
- U.S. bankruptcy courts can not discharge debts which are not disclosed in the debtors schedules;
- Debts for fraud, embezzlement, larceny or defalcation;
- U.S. bankruptcy courts can not discharge alimony and child support;
- Debts for willful or malicious injury to another;
- U.S. bankruptcy courts can not discharge fines and penalties assessed by a government authority;
- Student loans;
- U.S. bankruptcy courts can not discharge liability for personal injury and death while intoxicated, DWI, DUI;
- U.S. bankruptcy courts can not discharge debts omitted from prior bankruptcy cases filed by the debtor;
- Liability created by a settlement agreement with a depository institution relating to fraud, larceny, embezzlement or defalcation;
- Court orders and orders of other governmental authorities for payment of restitution; and
- Liability created under a divorce decree.
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