Category: Divorce and Bankruptcy

non-dischargeable debts

What is a non-dischargeable debt in bankruptcy?

When I first meet with a potential client, we discuss what debts are non-dischargeable debts under the bankruptcy code and what debts bankruptcy can help with. This is often the part of the consultation where we discuss the reason driving the client to file bankruptcy and the goals of the case. Bankruptcy can help with the client’s debts in most cases, but with certain debts the help is not in the form of a discharge of the obligation entirely.

What debts can bankruptcy help with?

Unsecured debts are debts that do not have collateral to look toward if the clients stops paying on the balance. These debts outside of bankruptcy could confiscate paid off cars, garnish wages, and/or freeze bank accounts for payment through a lawsuit and judgment. Unsecured debts in a chapter 7 bankruptcy often do not receive any payment. In a chapter 13 bankruptcy, this class of creditors often receives pennies on the dollar before the remainder of the obligation is discharged.

Unsecured Debts that can be discharged in bankruptcy:

  • credit cards
  • hospital bills
  • home or investment property foreclosure deficiencies
  • repossession deficiencies
  • business guarantees
  • IRS tax penalties

Secured Debts are obligations where if you stop paying the lender, the creditor/lender can repossess the collateral. The personal obligation can be discharged leaving only the lien for the following Secured Debts:

  • car leases
  • equipment leases
  • car loans
  • promissory note obligations to first mortgagees and/or second mortgagees (lien stays on property) on a property that client decides to surrender
  • HOA obligations on a property that client decides to surrender

What are non-dischargeable debts in bankruptcy?

There are other debts that may be unsecured, but are not dischargeable under the bankruptcy code provision 523.

These debts are examples of debts that cannot be discharged:

  • domestic support obligations (only child support and alimony in chapter 13; any DSO in a chapter 7)
  • IRS tax debt
  • student loans
  • trust account debts-Sales Tax and 941 obligations
  • debts procured from a misrepresentation or fraud

For more questions about your debts and whether bankruptcy can help, call the bankruptcy attorneys at the Bankruptcy Law Offices of James Schwitalla for your free consultation (305) 278-0811!

Divorce and Bankruptcy: Should the same attorney handle both?

Divorce and Bankruptcy are areas of law that often go hand-in-glove. The financial distress that precipitates one can also cause the other to occur. In many cases, divorce – and its resulting reduction of household income and duplication of living expenses – is the direct cause of bankruptcy!

So, what’s wrong with your divorce attorney handling your bankruptcy?!

In a word: everything!

My practice is limited to bankruptcy. Even after more than 21 years of practice – eating, drinking and sleeping this area of the law – I learn something new every day. I am constantly reading new cases on bankruptcy issues, reading and re-reading the bankruptcy code, rules of procedure and local rules, as well as confronting and analyzing new fact patterns that clients bring to my offices in Kendall Tamiami.

In addition to familiarity with the bankruptcy code, rules, and cases, I constantly remain vigilant as to changes in the state statutes and case law, for example those related to Florida’s exemptions, that intersect with bankruptcy law and can greatly affect what assets a client of mine can protect when they file a Chapter 7 or 13.

I am sure it is the same for similarly dedicated family law attorneys. I know enough about family law only to tell a client the basics, and refer them to an appropriate colleague of mine that practices that area of the law for an in-depth consultation.

As noted above, persons often have to face both divorce and bankruptcy due to the reduced income, and increased expenses and debts associated with the end of a marriage. But just because you happen to be in a divorce lawyer’s office when the thought of bankruptcy relief arises, does not make the nearest attorney your best choice for bankruptcy guidance.

Don’t order fish at a restaurant known for great steaks! And for heaven’s sake, do NOT have your divorce lawyer handle your bankruptcy. It literally could cost you everything!

When you go to the web site of my law firm, areas of practice page, you will NOT see family law: