4 Types of Debt That Cannot Be Discharged in a Nevada Chapter 7 Bankruptcy
The reason people file for Chapter 7 bankruptcy is to obtain a discharge of their debts. A discharge eliminates the debtor’s legal obligation to repay a debt. But not all debts can be discharged. The Bankruptcy Code lists a number of “non-dischargeable debts” that remain enforceable even after an individual completes the Chapter 7 process and receives a discharge of their other debts.
Here are four examples of non-dischargeable debts in Nevada Chapter 7 bankruptcy cases:
Domestic Support Obligations
Chapter 7 bankruptcy will not discharge any domestic support obligation (DSO) that you owe. A DSO includes any debt incurred before, during, or after bankruptcy with respect to spousal or child support. For example, if you obtained a divorce before your bankruptcy and the court ordered you to make monthly alimony or child support payments, those DSO payment obligations remain in effect after your bankruptcy.
Fraud-Related Debts
A debt is non-dischargeable if it was the result of “fraud or defalcation while acting in a fiduciary capacity, embezzlement, or larceny.” For example, say a debtor embezzled $10,000 from their former employer. The employer could file a claim in the bankruptcy case and seek a determination that the $10,000 is a non-dischargeable debt, meaning the employer could still sue the debtor to recover that money once the bankruptcy is complete. Similarly, the bankruptcy court can refuse to discharge debts obtained through fraud or misrepresentation on the debtor’s part, such as where a debtor made false or misleading statements to obtain a loan from a creditor.
Drunk Driving Accidents
Most personal injury judgments against a debtor can be discharged in Chapter 7 bankruptcy. For instance, if the debtor was involved in a car accident and the other driver obtained a $1 million personal injury judgment against the debtor, that entire judgment could be discharged. However, if the car accident was caused by the debtor while operating their vehicle under the influence of alcohol or drugs, the judgment is non-dischargeable under the Bankruptcy Code.
Debts Not Listed in Chapter 7
When you file a petition for Chapter 7 bankruptcy relief, you are required to file a list of all your known debts and creditors. If you fail to list a debt, even by accident, the bankruptcy court may find it non-dischargeable. In Chapter 7 cases where the debtor has no property subject to liquidation, meaning there are no assets for a trustee to administer and creditors receive nothing, the bankruptcy court may excuse the failure to list a debt and discharge it anyway. It is important not to gamble with the discharge, and to promptly file an amended list to add any “forgotten” creditors.
Contact a Las Vegas Chapter 7 Bankruptcy Lawyer Today
These are just a few examples of the kinds of debts that can be difficult, if not impossible, to discharge in bankruptcy. It is essential to work with a qualified Las Vegas Chapter 7 bankruptcy lawyer for individuals who can review your specific debts and advise you of whether or not they are eligible for a discharge. Contact Larson & Zirzow today at 702-382-1170 to schedule a complimentary consultation.
Source:
uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title11-section523&num=0&edition=prelim