What debts will not be erased through a Chapter 7 bankruptcy?

Debts that will survive and are not eliminated in a Chapter 7 bankruptcy are debts labeled as “priority” debts under the Bankruptcy Code. Priority debts include:       

  1. Domestic support obligations (child support and alimony).
  2. Extensions of credit to debtor after the filing of the case.
  3. Wages, salaries and commissions a debtor owes to any employees or independent sales reps, up to a maximum per person earned within the 180 days before the filing of the case or the cessation of business.
  4. Money owed by debtor to employee benefit plans for services rendered within the 180 days before the filing of the case or the cessation of business.
  5. Claims against the debtor by certain farmers and fishermen up to a certain amount per farmer or fishermen.
  6. Claims of individuals for deposits, up to a certain amount, for the purchase, lease, or rental of property, or services for personal, family or household use, that were not delivered or provided.
  7. Taxes, custom duties, and penalties owed to federal, state and local governmental units.
  8. Commitments to maintain the capital of an insured depository institution.
  9. Claims for death or personal injury resulting from the operation of a motor vehicle or vessel while the debtor was intoxicated from alcohol, a drug, or another substance.

Additionally, in most cases, private and federal student loans will not be discharged in a Chapter 7 bankruptcy case. Student loan debt must be addressed through the filing of an adversarial proceeding and after a separate hearing, the facts of the case are evaluated by the Bankruptcy Judge under a test provided by the case law.

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