10 Common Bankruptcy Questions

Are All Debts Discharged?
Burt Reynolds and Loni Anderson attend a movie premiere back when they were happily married. Even though Reynolds declared bankruptcy after their divorce in 1993, he still owes her $150,000. Ron Galella, Ltd./WireImage/Getty Images

Bankruptcy is designed to free struggling people from crushing levels of debt, but it's not a cure-all. There are several kinds of debts that even bankruptcy can't erase [sources: U.S. Courts, Michon, New York Fed]:

  • Unpaid child support or alimony
  • Student loans (Americans owe a whopping $1.12 trillion as of Q2 2014)
  • Most tax debts
  • IRS tax liens
  • Fines and penalties issued by government agencies
  • Debts from willful or malicious injury to persons or property
  • Debts resulting from driving while intoxicated

The bankruptcy court is also limited by what the debtor reports on his or her financial statements. If a creditor is not listed on bankruptcy documents, the debt will not be discharged. This is yet another reason to hire a bankruptcy attorney.