When considering bankruptcy as a potential solution for overwhelming debt in Texas, it is important to understand that not all debts can be discharged.
Certain obligations, known as non-dischargeable debts, will remain the debtor’s responsibility even after the bankruptcy process. Here are some key points regarding non-dischargeable debts in Texas:
What can and cannot be discharged
Non-dischargeable debts in Texas are determined by federal bankruptcy law, specifically under Chapter 7 and Chapter 13 bankruptcy. These chapters outline the rules and criteria for debt elimination or repayment. Chapter 7, or “total” bankruptcy, is quicker and directly eliminates most unsecured debts, while Chapter 13, or “reorganization” bankruptcy, requires you to repay some or all of your debts over a three- or five-year period, with the majority of debts discharged afterward.
Under both forms of bankruptcy, certain debts cannot be discharged. These typically include some tax debts, student loans (unless undue hardship can be proven), alimony and child support payments, debts resulting from fraud or illegal activities, court-ordered fines or restitution and debts arising from personal injury or wrongful death caused by driving under the influence.
While not common, it’s also possible for a creditor to successfully challenge the plan to discharge a debt they hold. This can happen if the creditor believes that you essentially took advantage of the system by “running up a bill” right before you filed.
Navigating non-dischargeable Debts
Understanding which debts are nondischargeable when filing for bankruptcy in Texas is essential for effectively managing your financial situation. Understanding your legal rights in these situations can help you properly handle bankruptcy and avoid issues.