Dischargeable vs Non-Dischargeable Debt in Bankruptcy

Posted on Oct 14, 2019

Dischargeable vs Non-Dischargeable Debt in Bankruptcy

If you owe money to a creditor, the creditor might be able to take you to small claims court. If the creditor wins and you owe them money, the court can issue a judgment, allowing the creditor rights to attempt to collect the funds you owe them, such by filing the judgement as a lien against property you own until you either refinance or sell. What about if a person files bankruptcy? Here we will discuss more about judgment liens where bankruptcy is concerned. 

Many debts are forgiven, or dischargeable, when it comes to bankruptcy cases, while others are not. Non-dischargeable debt is still owed after bankruptcy ends. If your judgment pertains to a non-dischargeable debt, you will not have financial relief from the debt when you file for bankruptcy. Any liens will remain after bankruptcy, meaning you will still owe it until it is paid or it otherwise becomes uncollectible as according to state law. 

Non-dischargeable debt can include:

  • Student loans (in most circumstances)
  • Recent income taxes
  • Child support or other domestic support obligations
  • Debt coming from bodily injury or death as a result of your intoxication

Other debts may be ordinarily discharged but a creditor can ask that certain debts be made non-dischargeable by the court. Examples of these include:

  • You committed a crime to gain money, services or goods (such as lying on an application for credit).
  • You embezzled money.
  • You caused injury to someone else willfully.

If a judgment lien is issued against you that is associated with dischargeable debt and you file bankruptcy, your debt will be cleared. This means the creditor cannot take action against you to obtain the funds.