What types of debts are non-dischargeable in bankruptcy?

Certain debts are non-dischargeable in bankruptcy proceedings. Understanding which debts are non-dischargeable is critical before moving forward with either a Chapter 7 or Chapter 13 bankruptcy.  Domestic support obligations are one category of non-dischargeable debts for purposes of bankruptcy.

One Wisconsin man recently learned the hard way that domestic support obligations can include attorneys’ fees for his ex-spouse. Following protracted litigation with his wife over divorce and custody issues, Christopher Trentadue was ordered to pay his ex-wife’s attorney $25,000. Instead of paying her though, Mr. Trentadue filed for Chapter 13 bankruptcy protection to avoid the debt.

Domestic support obligations (DSOs) are defined in the Bankruptcy Code as being “in the nature of …support…of such spouse, former spouse, or child of the debtor or such child’s parent…”

In re Trentadue

In the case Trentadue v. Gay (In re Trentadue), Mr. Trentadue argued that because the debt was payable to the attorney and not to his ex-wife, that it did not qualify as a domestic support obligation. The Seventh Circuit rejected Trentadue’s argument as to the wrong payee because he had not made the argument in the lower court. However, the court emphasized the intent of the state court in awarding the attorneys’ fees and determined that the ruling was not made as a punishment, but rather, as a means of support to his ex-spouse.

Other Non-Dischargeable Obligations

Regardless of the state you live in, federal laws govern your bankruptcy proceeding. Most exceptions to discharge can be found in 11 U.S.C. Section 523.  Common non-dischargeable obligations include:

  1. Certain tax debts
  2. Child support, alimony, or other family support obligations
  3. Personal injury damages that resulted from a DUI
  4. Student Loan debts, except in cases of undue hardship
  5. Fines for violating laws, including traffic tickets
  6. Debts that you forget to include in your bankruptcy application

Chapter 7 Bankruptcy Special Cases

If you’re filing for Chapter 7 bankruptcy protection, there are certain debts that a judge may determine are non-dischargeable. These can include things like:

  1. Any debt obtained via fraud, embezzlement, or theft.
  2. Debts incurred from malicious injury to another person or their property.
  3. Cash advances from consumer credit over $750 obtained within 70 days of the order for relief.
  4. Debts incurred for luxury items totaling more than $500 within 90 days before the order for relief.

Thinking About Bankruptcy?

Bankruptcy can provide a fresh start, but it’s best not to make it a DIY project. Consulting with a skilled bankruptcy attorney can make a significant difference in the outcome of your case. The award-winning bankruptcy attorneys of Hanson & Payne can easily assess your financial situation and provide expert guidance on what your options are. Contact us today or call (414) 271-4550 for a consultation.