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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
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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.
