What Debts Can and Cannot Be Discharged in Bankruptcy - Part 2

debts. Creditors cannot call, write, sue, garnish, or otherwise attempt collecting discharged obligations. This protection is automatic and permanent—no defensive action required. Simply inform creditors of your discharge, providing case number and discharge date. Continued collection attempts violate federal law. The right to damages for discharge violations provides enforcement teeth. Creditors who knowingly violate discharge injunctions face contempt sanctions including actual damages (emotional distress, lost wages from dealing with violations), attorney fees, and potentially punitive damages for egregious violations. Document all violations carefully—save letters, log calls, and preserve evidence of creditor contacts. Credit reporting protections ensure discharged debts cannot harm your credit rebuilding efforts. Discharged debts should show zero balance and "discharged in bankruptcy" status. Continued reporting as owing violates discharge injunctions and Fair Credit Reporting Act. Dispute incorrect reporting with credit bureaus and consider legal action for persistent violations. You retain rights to challenge dischargeability determinations. If creditors claim debts are non-dischargeable without court determination, you can seek declaratory judgments confirming discharge. This proactive approach provides certainty and prevents future collection attempts. Courts generally favor discharge when creditors fail to timely object during bankruptcy proceedings. Protection extends to informal collection pressure. Creditors cannot threaten criminal prosecution for discharged debts, attempt shaming through public disclosure, or use subterfuge to extract payment. Even suggesting moral obligations to pay discharged debts might violate injunctions if coercive. Your fresh start includes freedom from guilt-based collection tactics. Due process protects against improper discharge denial or revocation. Discharge can be denied only for specific reasons like fraud, failure to complete requirements, or prior discharge within prohibited timeframes. Revocation requires proving fraud or failure to report property acquisition within 180 days. These protections ensure discharge finality and fresh start certainty. ### Frequently Asked Questions About Dischargeable Debts Can I discharge debts from a divorce? Property settlement debts to ex-spouses discharge in Chapter 13 but not Chapter 7. Support obligations never discharge in any chapter. The distinction between support and property settlement often requires court interpretation. Hold harmless agreements regarding joint debts create non-dischargeable obligations in Chapter 7. Consider Chapter 13 if divorce debts burden your finances. What about government overpayments? Overpayments of government benefits like unemployment, Social Security, or veterans' benefits may discharge depending on circumstances. Overpayments resulting from fraud don't discharge. Those from agency error or changed circumstances often do. Government agencies must follow normal bankruptcy procedures—they cannot simply offset future benefits for discharged overpayments without court permission. Do cosigned debts discharge? Your bankruptcy discharges your personal obligation on cosigned debts but doesn't affect the cosigner's liability. Creditors can pursue cosigners immediately in Chapter 7. Chapter 13 provides "co-debtor stay" protecting cosigners during plan payments. Consider warning cosigners before filing and potentially helping with payments if maintaining relationships matters. Can gambling debts be discharged? Legal gambling debts generally discharge like any other unsecured debt. Casino markers, credit card advances for gambling, and personal loans discharge absent fraud. Illegal gambling debts might not discharge if connected to criminal activity. The key is whether debt arose from legal activity and whether fraud occurred in obtaining credit. What if I paid some creditors before filing? Preferential payments to creditors within 90 days (one year for insiders) might be recoverable by trustees. This doesn't affect discharge—the debts still discharge regardless of pre-petition payments. Trustees might sue payment recipients to recover funds for equal distribution. Your discharge remains valid even if trustees claw back preferences. Do private student loans discharge easier? No, private student loans face the same "undue hardship" standard as federal loans for discharge. Some courts scrutinize private loans more carefully since they lack federal loan protections and flexible repayment options. However, the discharge standard remains extremely difficult regardless of loan type. Don't assume private status improves discharge chances. Can discharged debts be sold to collectors? Selling discharged debt violates bankruptcy law, but some unscrupulous creditors attempt it anyway. Debt buyers who knowingly purchase discharged accounts face discharge violation sanctions. Always respond to collection attempts on discharged debts by providing bankruptcy information. Consider legal action if collectors persist despite notice. What about HOA fees and assessments? Pre-petition homeowner association fees discharge in bankruptcy. However, post-petition assessments remain your responsibility as long as you own the property. Some associations attempt claiming all fees are non-dischargeable, but courts consistently limit ongoing liability to post-petition amounts. Surrender property to terminate future HOA obligations. Do payday loans require special treatment? Payday loans discharge normally despite their unique characteristics. Some lenders claim post-dated checks create fraud liability, but courts reject this argument absent actual deception. High interest rates and rollover fees don't affect dischargeability. Include all payday lenders in schedules to ensure discharge despite their aggressive collection tactics. Can I discharge debt buyer lawsuits? Yes, debts discharge regardless of who owns them or litigation status. Debt buyers who purchased accounts cannot avoid discharge through lawsuits. Pending lawsuits must stop immediately upon bankruptcy filing. Judgments entered pre-petition discharge if the underlying debt qualifies. Original creditor selling debt doesn't affect your discharge rights. ### Maximizing Your Bankruptcy Discharge Benefits Understanding discharge scope empowers strategic bankruptcy planning and sets realistic expectations for financial relief. While bankruptcy cannot eliminate every debt, it provides powerful relief from most financial obligations crushing your economic future. Focus discharge benefits where they matter most. If overwhelmed by dischargeable credit cards and medical bills, bankruptcy provides complete relief. If burdened primarily by student loans or recent taxes, explore bankruptcy alternatives or Chapter 13 payment plans. Match bankruptcy's tools to your specific debt problems for maximum benefit. Prepare for non-dischargeable debts surviving bankruptcy. Calculate post-discharge budgets accounting for ongoing student loans, support obligations, and non-dischargeable taxes. Explore payment plans, modifications, or settlements for surviving debts. Bankruptcy eliminates competing obligations, freeing resources to address non-dischargeable debts responsibly. Document discharge violations vigilantly. Creditors sometimes violate discharge injunctions through ignorance or willfulness. Maintain discharge papers readily available. Respond immediately to improper collection attempts. Consider legal action for persistent violations—statutory damages and attorney fees make enforcement cases attractive for consumer attorneys. View discharge as beginning your financial recovery, not ending financial responsibility. While eliminating legal obligations to pay discharged debts, maintain relationships that matter through voluntary payments if desired. Focus fresh start benefits on building emergency funds, saving for retirement, and avoiding future debt problems. Most importantly, understand that discharge complexities don't diminish bankruptcy's value for overwhelming debt situations. Even with exceptions for certain debts, bankruptcy typically eliminates enough obligations to restore financial stability. Perfect discharge isn't necessary—substantial relief suffices to reclaim your financial future. By understanding exactly which debts bankruptcy can and cannot discharge, you make informed decisions about seeking relief and plan effectively for post-bankruptcy success. Knowledge of discharge scope transforms bankruptcy from mysterious process to powerful tool for addressing specific debt problems and achieving lasting financial recovery.