Key Takeaways

  • Student loans are generally not dischargeable in bankruptcy unless undue hardship can be proven.
  • Secured debts, like mortgages and auto loans, cannot be discharged unless you surrender the collateral.
  • Credit card debt incurred through fraudulent activity or luxury purchases shortly before filing may not be discharged.
  • Alimony and child support payments are non-dischargeable in bankruptcy under any circumstances.
  • Tax debts are typically not dischargeable, especially those less than three years old.

Filing for bankruptcy can offer a fresh financial start, but it’s important to understand that not all debts can be discharged. Certain loan debts remain your responsibility even after a bankruptcy filing.

This blog post will explore the categories of debts that cannot be discharged when you file for bankruptcy, providing essential insights into how these debts impact your financial situation and what debt consolidation alternatives you may have.


Understanding Non-Dischargeable Debts

When you file for bankruptcy, the court will review your debts and determine which can be discharged and which cannot. Non-dischargeable debts are those that you are still required to pay even after the bankruptcy process is complete. Knowing which debts fall into this category can help you better plan your financial future and explore other options such as debt consolidation programs, debt management plans, or credit consolidation services.

Types of Non-Dischargeable Debts


Not all debts can be discharged when you file for bankruptcy.  This means that you will still be responsible for paying them even after the bankruptcy process is complete.

Student Loans

Student loan debt is notoriously difficult to discharge in bankruptcy. Under current laws, student loans are only discharged if you can prove “undue hardship,” which is a high standard to meet. This means most people will continue to be responsible for their student loan repayments even after bankruptcy.

Secured Debts

Secured debts like mortgages and auto loans are tied to collateral. While you might be able to eliminate personal liability for these debts, the lender can still repossess the property if payments are not made.

Tax Debts

Certain tax obligations are non-dischargeable, including most federal, state, and local taxes. However, there are exceptions based on the age and type of tax debt.

Alimony and Child Support

Obligations related to alimony and child support are not dischargeable in bankruptcy. These payments must continue as ordered by the court.

Recent Credit Card Debt and Luxury Purchases

Recent charges for luxury items or substantial cash advances on credit card balances within a specific period before filing for bankruptcy can be deemed non-dischargeable.

Debts from Fraud or Illegal Activities

Debts incurred through fraudulent activities, embezzlement, or other illegal actions are not discharged in bankruptcy.


Alternatives to Bankruptcy for Managing Non-Dischargeable Debts

If you have significant non-dischargeable debts, exploring debt relief options for bankruptcy might be beneficial. Here are a few options:

Debt Consolidation Programs

Debt consolidation programs are designed to help individuals manage multiple debts by combining them into a single loan with one monthly payment. This consolidation often comes with a lower interest rate than the individual debts, which can reduce the overall cost of repayment.

  1. Simplified Repayment: Instead of juggling multiple payments and due dates, you only have one monthly payment, making it easier to stay on top of your finances.
  2. Lower Interest Rates: By consolidating debts, you may secure a lower interest rate, which can reduce the amount of interest you pay over time.
  3. Improved Credit Score: Regular, on-time payments on your consolidation loan can help improve your credit score.
  4. Stress Reduction: Managing a single loan can be less stressful than dealing with multiple creditors.

Credit Counseling Services

Credit counseling services offer professional advice and strategies for managing your debt and improving your financial health. These services are typically provided by nonprofit credit counseling agencies and can be very beneficial for those struggling with debt.

  1. Debt Management: Counselors can help you create a debt management plan tailored to your financial situation.
  2. Budgeting Assistance: They provide tools and guidance to help you develop and stick to a realistic budget.
  3. Credit Score Improvement: By following their advice, you can improve your credit score over time.
  4. Educational Resources: Many agencies offer educational resources to help you understand and manage your finances better.

Debt Management Plans

A debt management plan (DMP) is an arrangement between you and your creditors facilitated by a credit counseling agency. The agency negotiates on your behalf to lower interest rates and monthly payments, making it easier to pay off your debt over time.

  1. Lower Interest Rates: Agencies can often negotiate lower interest rates with your creditors.
  2. Single Monthly Payment: You make one monthly payment to the agency, which then distributes the funds to your creditors.
  3. Reduced Fees: Late fees and over-limit fees may be waived as part of the plan.
  4. Structured Repayment: A DMP provides a structured plan to pay off your debts, typically within three to five years.

Debt Settlement Companies

Debt settlement companies negotiate with your creditors to reduce the total amount you owe. They aim to settle your debts for less than the full balance, which can significantly reduce your debt burden.

  1. Reduced Debt: Settlements can result in paying a lower amount than the original debt.
  2. Single Payment Plan: These companies typically set up a single monthly payment plan for you.
  3. Debt Resolution: It can be a faster way to resolve outstanding debts compared to other methods.

Personal Loans

Personal loans can be an effective way to consolidate debt, especially if they offer lower interest rates than your current debts. These loans are typically unsecured, meaning they do not require collateral.

  1. Debt Consolidation: You can use a personal loan to pay off high-interest debts, combining them into a single loan with one monthly payment.
  2. Lower Interest Rates: If you have good credit, you might qualify for a personal loan with a lower interest rate than your current debts.
  3. Fixed Repayment Terms: Personal loans typically have fixed repayment terms, which can help you plan your finances better.

Understanding which debts are non-dischargeable when you file for bankruptcy is crucial for effective financial planning. By exploring alternatives such as debt consolidation services, debt management plans, and credit counseling, you can find viable solutions to manage and reduce your debt burden. Always consider consulting with a professional to navigate your options and make informed decisions that align with your financial goals.


Secure Your Financial Future with Alleviate Financial’s Debt Relief Programs

Managing debt can be overwhelming, but you don’t have to do it alone. At Alleviate Financial, we offer comprehensive debt relief programs tailored to your unique financial situation. Our experienced debt specialists are here to help you navigate your options and create a custom plan that leads to financial freedom.

Whether you need debt consolidation, credit counseling, or debt settlement services, we have the solutions to help you achieve your financial goals. Contact Alleviate Financial today for a free consultation and take the first step towards a debt-free future!