Sacramento Bankruptcy: What Debts Can be Discharged in Bankruptcy?

25 different types of debts are ineligible for discharge under existing Chapter 7 bankruptcy law.  Likewise, six types of debt cannot be discharged under Chapter 13.  These debts can only be discharged under the “superdischarge” provision.  Debts such as those incurred from fraud, from willful and malicious injury to another or another’s property, from larceny, breach of trust, or embezzlement, and non-support debts arising from a marital settlement agreement or divorce decree can be discharged under the “superdischarge” provision.  

Bankruptcy reforms will disallow 5 types of debt from “superdischarge” which are currently dischargeable in a Chapter 13 filing, including:
1)  Debts Incurred Through Fraud or Misrepresentation- Credit card debts which were incurred as a result of misleading information on a loan application are included here.
2)  Debts Incurred Through Embezzlement or Breach of Fiduciary Duty
3)  Taxes- “Superdischarge” can still apply to unpaid taxes that are timely filed; however, taxes which should have been withheld, trust fund taxes, un-filed or late-filed tax obligations will not be allowed to be “superdischarged.”  Fraudulent tax returns are non-dischargeable.

4)  Debts Arising from Death or Personal Injury Caused by Debtor’s Willful or Malicious Conduct- “Superdischarge” is still allowable for debts for willful and malicious injury to property.

5)  Debts to Creditors who were not Notified in Time for the Creditor to File a Proof of Claim.

Sagaria Law’s Sacramento attorneys can give you more information on important changes in the bankruptcy code.  Call today for consultation.

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