Although bankruptcy offers debtors a unique method to escape creditor collection calls and restart finances after poor decision making or unexpected financial downturns, it is not without its exceptions. When most people consider how debts are released in bankruptcy, they are thinking of debt discharge. However, there are certain types of debt and certain times when debt will not be discharged, usually due to the debtor's misdoing. This type of debt is generally known as non-dischargeable debt.
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A few kinds of debt are inherently non-dischargeable. For the most part, debts that cannot be discharged and are not incurred under fraudulent actions are characteristically long-term. The primary types of debt under this subsection are student loans, alimony, child support, and taxes. Considering how alimony works, it is no surprise that it is considered a non-dischargeable payment under the bankruptcy code. After all, permanent alimony, in some jurisdictions, can even follow the payer's estate after that person's death.
In addition to these major debts, cooperative payment fees are considered non-dischargeable. Considering that these payments directly involve other parties that may be relying on the debtor's contributions, it only seems fair that these debts and fees must be accounted for.
If a court or creditor reveals evidence that a debtor has been taking illegal action in order to obtain a debt or maintain a debt, those funds may immediately be considered non-dischargeable by the bankruptcy courts. This can include instances in which a debtor has used false information in order to obtain a debt as well as fraudulent record-keeping. Debts incurred because of a personal injury or wrongful death suit may also be considered non-dischargeable, as these payments directly reflect the negligence of the debtor and are paid to an accident victim as compensation for his or her losses.
For more information concerning what debts are or are not dischargeable, contact a bankruptcy lawyer.
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