It’s often the case that North Carolinians facing financial trouble and thinking about bankruptcy don’t understand all of the important details about the process. One common misunderstanding is that once a bankruptcy has been filed all your debts are immediately discharged, meaning you can start anew with a blank financial slate. Sadly, that is not always the case as there are some categories of debt that cannot be discharged during the bankruptcy process. Though this may not affect everyone, it’s important to understand which debts are and which debts are not dischargeable before beginning the bankruptcy process.
What does it mean to “discharge” a debt?
So how do you know which categories of debt are dischargeable and which aren’t? Start by looking at the bankruptcy code. Section 523(a) of the Bankruptcy Code contains a list of which debts cannot be discharged during a bankruptcy. This means that if your debts fall into one of the listed categories even if you prevail in your bankruptcy filing you will still be responsible for paying back the money owed.
What is not dischargeable?
Some good examples of debts that are not dischargeable during bankruptcy include things like child support and alimony arrearages, back taxes, many if not most student loans, debts that were not disclosed by the debtor and certain personal injury judgments and, oddly, debts that are related to housing fees. Also, debts that were acquired by fraud and debts that are related to criminal penalties or restitution are not eligible for discharge.