When considering whether to file a Chapter 7 Bankruptcy, one of the questions that must be answered is will the debt be discharged in a Chapter 7 Bankruptcy?

Some debts pass through Chapter 7 Bankruptcy.  For example, secured debt like a mortgage or auto loan still attached to the collateral.  If you are in default after the automatic stay has expired or a relief of automatic stay is granted, your creditor has a right to the collateral.  However, the Chapter 7 Bankruptcy discharge prevents the mortgage lender or auto lender from pursuing you personally for the deficiency of the loan unless you signed a Reaffirmation Agreement that binds you personally to the loan.  If you signed a Reaffirmation Agreement, the lender can not only repossess or foreclose on the collateral but also pursue you personally for the deficiency like wage garnishment or bank levy.

Priority debts like recent income tax or payroll tax also pass through Chapter 7 Bankruptcy.  Unlike the mortgage lender or auto lender, the Internal Revenue Service or Franchise Tax Board can pursue wage garnishment or bank levy even after a Chapter 7 Bankruptcy discharge without a Reaffirmation Agreement.  Moreover, the IRS or FTB can place a lien on your house or other real property.

Below are the most common debts that are not discharged in Chapter 7 Bankruptcy:

1.  Recent Taxes and Customs Duties. Click here for more information.

2.  Debts incurred to pay nondischargeable taxes.  This prevents a debtor from substituting a dischargeable debt for a nondischargeable debt.

3.  Domestic Support Obligations.  Under 11 U.S.C. 101(14A), "domestic support obligation" goes beyond child support and alimony to also include debts for assistance (in the nature of support) furnished by a governmental agency to the debtor's family for which the debtor is liable.  For example, this includes daily support expenses for minor held in juvenile detention facility and support debt owed to the government (public assistance reimbursement) under the Social Security Act, both of which are nondischargeable.

4.  Property Settlement and Other Marriage Dissolution/Separation-Related Nonsupport Debts.  Nonsupport Debt owed to a spouse, former spouse, or child incurred by the debtor in the course of a divorce or separation or rooted in a separation agreement, dissolution judgment, other court order, or a governmental agency determination.  Debt need not be payable directly to ex-spouse but the debt must be owed directly to a spouse, former spouse or child or the debt's benefit must flow to one of those family members.  For example, in the dissolution judgment, debtor's promise to pay joint credit card debt is nondischargeable under 11 U.S.C. 523(a)(15). 

5.  Governmental Fines, Penalties, Forfeitures unless it is a compensation for actual pecuniary loss or dischargeable tax debt.

6.  Federal Criminal Restitution.

7.  Student Loans unless it would impose an undue hardship on the debtor and the debtor's dependents.

8.  401k Loans or other Loan Repayments to tax-sheltered Retirement Plans.

9.  Debts from Prior Bankruptcy Case in which debtor was denied or waived discharge.

10.  Debts incurred through false pretenses, false representation or actual fraud.

11.  Debts based on willful and malicious injury to person, entity or property.  This is limited to intentional torts and exclude negligent or reckless torts.  Debtor must intend the consequences of the act and not simply the act itself.  Act must be "willful" and "malicious".

12.  Debts for death or personal injury resulting from debtor's intoxication.

There are more debts not listed above that are not discharged in Chapter 7 Bankruptcy.  The above are the more common ones that I have seen from consultation with clients.

Even if your debt does not fall within the complete list of nondischargeable debts, you can still be denied a discharged for other reasons.  For example, debtor already filed a bankruptcy recently and insufficient time has elapsed for you to qualify for another bankruptcy discharge.  Another example, debtor filed bankruptcy under "bad faith" or there was fraudulent transfer or concealment of assets.  There are more situations where a debtor can be denied a discharge but cannot be fully discussed on a website.  

Moreover, there are other considerations that you must make before filing a Chapter 7 Bankruptcy, which can only be properly explored in a consultation with an experienced Bankruptcy Attorney.