What Debts Cannot Be Discharged in Bankruptcy?

Filing for bankruptcy can be a powerful tool for regaining financial control, offering relief from mounting debts and aggressive collection efforts. However, it’s important to understand that bankruptcy is not a blanket solution for all types of debt. While many unsecured debts—like credit cards and medical bills—can be discharged, others are protected by law and must be repaid even after your bankruptcy case concludes.

This blog will explain the types of debts that bankruptcy does not eliminate, how they’re treated under different bankruptcy chapters, and what you need to know before filing.

What Is a Non-Dischargeable Debt?

In bankruptcy, a discharge refers to the legal elimination of a debtor’s obligation to pay certain debts. When a debt is non-dischargeable, it means that the bankruptcy court does not allow the debt to be wiped out. The creditor retains the right to collect on the debt even after the bankruptcy case is over.

Some debts are automatically non-dischargeable by law, while others may be ruled non-dischargeable by the court, particularly if a creditor files a formal objection known as an adversary proceeding.

1. Child Support and Alimony

One of the clearest examples of non-dischargeable debt is domestic support obligations, which include child support and spousal support (alimony). These debts are considered a matter of public policy because they are intended to support the well-being of children and former spouses.

Even if you file for Chapter 7 or Chapter 13 bankruptcy, these obligations:

• Remain fully enforceable
  
• Must continue to be paid during and after bankruptcy
  
• Are not subject to reduction or renegotiation through bankruptcy proceedings
  

If you’re behind on payments, your past-due support will also be treated as a priority debt, meaning it must be paid in full under a Chapter 13 repayment plan.

Important: Courts take domestic support obligations seriously. Missing payments after bankruptcy can lead to wage garnishment, seizure of tax refunds, or even contempt of court charges.

2. Certain Tax Debts

Not all tax debts are dischargeable, and understanding the distinction is essential. The bankruptcy code allows some older income tax debts to be discharged if they meet specific criteria. However, recent tax debts, payroll taxes, and fraud-related tax penalties are excluded from discharge.

To qualify for discharge, an income tax debt must meet the following conditions:

• The tax return was due at least three years before filing bankruptcy
  
• You filed the return at least two years before filing
  
• The tax was assessed by the IRS at least 240 days prior to your filing
  
• The debt is not tied to fraudulent conduct or intentional tax evasion
  

Non-dischargeable tax debts include:

• Tax penalties from fraud or evasion
  
• Employer withholding taxes (trust fund taxes)
  
• Tax liens (even if the tax itself is dischargeable, the lien may survive)
  

Note: Even if a tax debt qualifies for discharge, any recorded tax lien may still remain attached to your property after the case ends.

3. Student Loans

Student loans are among the most discussed and debated categories of non-dischargeable debt. Under current U.S. law, federal and private student loans are not discharged in bankruptcy unless the borrower can demonstrate undue hardship, a legal standard that is difficult to meet.

Courts generally apply the Brunner Test, which requires proving:

• You cannot maintain a minimal standard of living if forced to repay the loan
  
• Your financial situation is likely to persist for a significant portion of the repayment period
  
• You’ve made a good faith effort to repay the loan
  

This determination is made through an adversary proceeding, which is a separate lawsuit filed within the bankruptcy case. Even though discharging student loans is challenging, recent legal discussions and reforms have created pathways for certain borrowers—especially those with long-term disabilities or extreme financial hardships—to pursue relief.

Tip: If you have student loan debt and are considering bankruptcy, it’s important to evaluate whether an undue hardship claim may apply in your situation.

4. Debts Incurred Through Fraud or Misrepresentation

Bankruptcy law prohibits the discharge of debts that were obtained through fraud, deceit, or intentional misrepresentation. If a creditor can prove that the debt was the result of dishonest behavior, the bankruptcy court may rule that the debt remains enforceable.

Examples include:

• Lying on a loan or credit application
  
• Writing bad checks knowingly
  
• Obtaining credit or loans using false identification
  
• Making luxury purchases with no intent to pay them back
  

Creditors must file a timely objection during the bankruptcy process to challenge the discharge of such debts. If they succeed in court, the debt remains valid even after the bankruptcy concludes.

Warning: Attempting to hide assets, transfer property to relatives, or falsify information in bankruptcy filings can also result in denial of discharge for all debts and potential legal penalties.

5. Criminal Fines, Restitution, and Government Penalties

Debts related to criminal offenses are never dischargeable in bankruptcy. This includes:

• Court-imposed fines
  
• Restitution ordered to crime victims
  
• Traffic violations
  
• Civil fines and penalties owed to government agencies
  

Bankruptcy is designed to address financial issues—not to forgive consequences tied to criminal or civil wrongdoing. These debts must be repaid in full, regardless of the outcome of your bankruptcy case.

Example: If you were ordered to pay restitution in a theft case, bankruptcy will not relieve you of that responsibility.

6. Debts Resulting from DUI-Related Personal Injury

If you cause an accident while driving under the influence of drugs or alcohol and someone is injured or killed, any related debt—such as a civil judgment for medical bills, lost wages, or damages—is not dischargeable in bankruptcy.

This applies even if the injury claim was pursued in civil court rather than through criminal prosecution. Bankruptcy courts treat DUI-related injury claims with strict scrutiny and maintain the victim’s right to compensation.

Key Point: Bankruptcy cannot shield individuals from liability for harm caused by reckless or intoxicated behavior behind the wheel.

7. Luxury Purchases and Cash Advances Shortly Before Filing

Bankruptcy courts may deny the discharge of debts for luxury goods or cash advances obtained shortly before filing. These transactions may be presumed fraudulent if they fall within the following thresholds:

• Consumer purchases over $800 made within 90 days before filing
  
• Cash advances over $1,100 taken within 70 days before filing
  

Courts evaluate whether the debtor had an intention to repay or was acting in bad faith, such as attempting to run up debts before seeking discharge.

Advice: Avoid using credit cards or taking out cash advances in the months leading up to a bankruptcy filing unless absolutely necessary and justifiable.

How Chapter 7 and Chapter 13 Treat Non-Dischargeable Debts

The bankruptcy chapter you file under affects how non-dischargeable debts are handled:

Chapter 7 Bankruptcy:

• Often called “liquidation bankruptcy”
  
• Non-dischargeable debts are not eliminated
  
• Debtor remains personally responsible for repayment after the case ends
  
• Useful for eliminating unsecured debts quickly, but no repayment plan is established
  

Chapter 13 Bankruptcy:

• Also known as a “wage earner’s plan”
  
• Debtor proposes a repayment plan lasting 3 to 5 years
  
• Non-dischargeable debts are included in the plan
  
• Allows time to catch up on obligations like child support or tax debt
  

Important: Filing under Chapter 13 may help manage non-dischargeable debts by spreading payments out over time under court protection.

Final Thoughts

While bankruptcy can bring significant relief from financial pressures, it is not a cure-all. Understanding which debts are non-dischargeable is critical for making an informed decision about whether and how to proceed.

Non-dischargeable debts—including domestic support obligations, recent tax debts, student loans (with exceptions), and debts arising from fraud or criminal activity—must still be addressed through payment or legal resolution.

Need more clarity on what bankruptcy can and cannot do? Call Padgett & Robertson at (251) 342-0264 to discuss your legal options in a confidential setting.

Disclaimer: This blog post is intended for informational purposes only and does not constitute legal advice. For advice specific to your situation, consult a licensed bankruptcy attorney in your jurisdiction.