What Debts Cannot Be Discharged in Bankruptcy?

Bankruptcy promises a fresh start. But it does not erase everything. Certain debts follow you right through the process and come out the other side untouched. Most people find this out too late. Knowing what stays and what goes before you file can completely change your strategy. At Schisano Law, Attorney Richard Schisano brings over four decades of experience to help you understand exactly where you stand before you file. Read on. This is the part most articles skip.

What Does “Discharge” Mean in Bankruptcy?

A discharge wipes out your legal obligation to pay a debt. After discharge, a creditor cannot call you, sue you, or garnish your wages to collect that debt.

But a discharge is not a blank slate. Federal law, specifically 11 U.S.C. § 523 of the United States Bankruptcy Code, lists the types of debts that survive bankruptcy. New York courts follow this federal framework. The list is longer than most people expect.

Debts That Bankruptcy Cannot Erase

Not all debts are created equal. Some are wiped out easily. Others are protected by federal law and survive no matter what chapter you file under.

1. Most Student Loans

Student loan debt is one of the hardest to discharge. Under 11 U.S.C. § 523(a)(8), student loans, federal or private, are not dischargeable unless you can prove “undue hardship.”

New York courts use the Brunner test to decide undue hardship. You must show:

• You cannot maintain a minimal standard of living while repaying the loan
• Your financial situation is unlikely to improve
• You made a good-faith effort to repay

This is a high bar. Most filers do not meet it. However, it is not impossible. An experienced bankruptcy lawyer in New York can tell you if your case qualifies.

2. Child Support and Alimony

Domestic support obligations are completely protected under 11 U.S.C. § 523(a)(5). This includes:

• Child support payments
• Alimony or spousal maintenance
• Any arrears owed under a New York family court order

New York Domestic Relations Law governs support orders issued in state court. Bankruptcy does not touch these. Period.

3. Most Tax Debts

Not all taxes survive bankruptcy, but most recent ones do. Under 11 U.S.C. § 523(a)(1), income taxes are non-dischargeable if:

• The tax return was due within the last three years
• The return was filed within the last two years
• The IRS assessed the tax within 240 days before filing

Older taxes may be dischargeable if all timing rules are met. A bankruptcy lawyer can review your IRS transcripts to see where your tax debts fall.

New York State taxes work similarly. The New York State Department of Taxation and Finance can still pursue you for recent state income tax debt even after a federal bankruptcy discharge.

4. Debts from Fraud

If you obtained a loan or credit through false pretenses, that debt will not be discharged. 11 U.S.C. § 523(a)(2) covers:

• Lying on a credit application
• Using someone else’s identity to get credit
• Making false promises to a lender

Creditors can file an adversary proceeding in bankruptcy court to challenge a discharge on fraud grounds. If they win, you still owe the debt.

5. Debts from Willful or Malicious Injury

If a court found you liable for intentionally harming someone or their property, that judgment survives bankruptcy. This falls under 11 U.S.C. § 523(a)(6).

Examples include:

• Assault and battery judgments
• Intentional destruction of property
• Certain cases of elder financial abuse

Negligence claims, like a car accident, are generally dischargeable. Intentional harm is not.

6. Fines and Penalties Owed to Government

Criminal fines, court fees, and restitution orders are non-dischargeable under 11 U.S.C. § 523(a)(7). This includes:

• Traffic fines owed to New York municipalities
• Criminal restitution ordered by a New York court
• Penalties assessed by state or federal agencies

If you owe fines to Orange County or the City of Newburgh, bankruptcy will not wipe those out.

7. DUI-Related Debts

If you caused death or injury while driving under the influence, those debts survive bankruptcy. 11 U.S.C. § 523(a)(9) protects victims in these cases.

New York’s DWI laws under Vehicle and Traffic Law § 1192 already carry serious penalties. If a civil judgment followed a DWI conviction, that judgment is not dischargeable.

8. Debts You Did Not List in Your Bankruptcy Filing

If you forgot to list a creditor in your bankruptcy schedules, or left one out on purpose, that debt may not be discharged. 11 U.S.C. § 523(a)(3) requires that debts be properly disclosed.

This is one reason accuracy in your bankruptcy paperwork matters. Every creditor must be listed with the correct address and balance.

What About Recent Luxury Purchases or Cash Advances?

Timing matters more than most people realize. Under 11 U.S.C. § 523(a)(2)(C):

• Luxury goods or services over $800 charged within 90 days before filing are presumed non-dischargeable
• Cash advances over $1,100 taken within 70 days before filing are also presumed non-dischargeable

These presumptions exist to stop people from running up debt right before filing. A creditor can challenge the discharge of these debts without having to prove fraud.

Chapter 7 vs. Chapter 13: Does the Type of Bankruptcy Matter?

Yes, and the difference is worth understanding. The rules above apply to both Chapter 7 and Chapter 13. But Chapter 13 has one additional exception.

Under 11 U.S.C. § 1328(a)(2), a Chapter 13 “super discharge” can eliminate some debts that survive Chapter 7, such as certain marital property settlement debts that are not support obligations.

However, the core non-dischargeable debts, including student loans, taxes, child support, and fraud debts, survive both chapters.

New York-Specific Exemptions You Should Know About

Even if a debt is dischargeable, you want to protect your property during bankruptcy. New York allows filers to choose between state and federal exemptions. Most New York filers choose the state exemptions because they are more generous for real property.

Key New York exemptions include:

• Homestead exemption (CPLR § 5206): Up to $142,350 in equity for homes in Orange County and Dutchess County, updated every three years. Married couples filing jointly may double this amount.
• Retirement accounts: ERISA-qualified plans and IRAs are fully exempt under New York CPLR § 5205(c)
• Personal property protections: Specific categories of personal property are protected by statute. New York does not have a large general wildcard exemption, but does provide a $1,175 alternative cash exemption if you do not use the homestead exemption
• Motor vehicle: Up to $4,825 in equity
• Cash: Up to $6,000 if the homestead exemption is not used
• Tools of the trade: Up to $3,575

Knowing which exemptions apply to your situation can mean the difference between keeping your home and losing it.

Frequently Asked Questions

Can bankruptcy discharge medical debt?

Yes. Medical bills are unsecured debts. They are dischargeable in both Chapter 7 and Chapter 13. This is one of the most common reasons people file in New York.

Can I discharge credit card debt?

Generally, yes. Credit card balances are unsecured debts and are typically discharged. The exception is if the charges were fraudulent or made shortly before filing under the timing rules above.

Can bankruptcy stop a wage garnishment in New York?

Yes. Filing triggers an automatic stay under 11 U.S.C. § 362, which stops most collections immediately, including garnishments issued under New York CPLR Article 52. The stay goes into effect the moment you file.

Can IRS tax liens be discharged?

A discharge may eliminate your personal liability for old income taxes. But a tax lien recorded against your property before filing may still survive as a lien against that property. This is a nuanced area that requires careful legal review before you file.

Your Bankruptcy Lawyer in New York Is One Call Away from Giving You Real Answers

Stop guessing. The debts you think bankruptcy cannot touch may actually be dischargeable. And the debts you think will disappear may not. You need a bankruptcy lawyer in New York who has seen these situations before and knows exactly how the law applies to your case.

Richard Schisano has been practicing bankruptcy law in the Hudson Valley since 1980. With over 2,000 cases behind him, he has helped individuals, families, and businesses in Orange County, Dutchess County, and across the region get real results. He knows what a fair outcome looks like and how to get there.

Our office is located at 103 Executive Dr, New Windsor, NY 12553.

The first step costs nothing. We offer free consultations to review your debt, explain your options honestly, and give you a clear picture of what bankruptcy can and cannot do for your situation.

Call (845) 562-1515 or contact us online today.