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The Bankruptcy Code favors giving debtors their discharge but at the same time, there are certain types of debts for which the Code feels discharge is not appropriate. A debtor goes through the process and gets a discharge but a particular debt is excepted from that discharge. A denial of discharge of any one of these individual debts does not affect the debtor's right to discharge in general.

A specific debt owed by the debtor will not be discharged if:

1. The debtor is an individual (does not apply to other entities);

2. The debtor seeks a discharge under Chapters 7, 11, 12 or a hardship discharge under 13. (A regular Chapter 13 discharge, unless otherwise qualified, discharges even these debts listed below as nondischargeable- see XVII D. above); and,

3. The debts are for: a. Taxes

No discharge for certain taxes or customs duties or for money borrowed to pay any of these taxes. (§523(a)(1) & (14), (14A)); b. Money, Property, or Services Obtained by False or Fraudulent

Activities

No discharge for money, property, services or an extension, renewal or refinancing of credit obtained by:

(i) False pretenses, false representations, or actual fraud (other than involving financial condition); or

(ii) The use of a materially false statement in writing regarding the financial condition of the debtor or its insiders which the debtor caused to be published and on which the creditor reasonably relied. (§523(a)(2)(A) & (B)).

c. Luxury Goods

No discharge for consumer debts aggregating $650.00 (this figure is adjusted every three years with the next adjustment based on the CPI to be made 4/1/16) or more for the purchase of luxury goods or services owed to a single creditor and incurred within 90 days of filing of the bankruptcy. (Luxury items are not necessary for support or maintenance.) (§523(a)(2)(C)).

d. Cash Advances

No discharge for cash advances aggregating $925.00 (this figure is adjusted every three years with the next adjustment based on the CPI to be made on 4/1/16) or more under an open-end consumer credit plan obtained from a single creditor within 70days of filing. (§523(a)(2)(C)).

e. Failure to Properly Schedule Debts

No discharge for debts which are neither listed nor scheduled in the bankruptcy petition with the name of the creditor, if known, in time to allow:

(i) The creditor to timely file a proof of claim; or,

(ii) If the claim is of the type specified under a XVIII A.3.b), f) or h) in time for a timely objection to discharge. (§523(a)(3)).

(iii) If the creditor had notice or actual knowledge of the bankruptcy, this provision will not apply.

(iv) Note: Unless the failure to list was deliberate and there were assets in the estate, courts tend to treat debtors leniently under this exception.

f. Fraud or Defalcation While Acting as a Fiduciary

No discharge for obligations which arose by fraud or defalcation while acting in a fiduciary capacity (must be a “real,” as opposed to “at law,” trust relationship), or by embezzlement or larceny. (§523(a)(4)).

g. Domestic Support Obligations

No discharge for domestic support obligations (nondischargeable even under a regular Chapter 13 bankruptcy). (§523(a)(5)).

h. Willful and Malicious Injuries

No discharge for obligations which arose by willful and malicious injury caused by the debtor to another entity or the property of another entity. (§523(a)(6)).

i. Fines, Penalties and Forfeitures

No discharge for obligations which involve certain fines, penalties and forfeitures payable to the government. (§523(a)(7)).

j. Educational Loan Obligations

No discharge for obligations which involve an educational loan or similar obligations unless undue hardship is established. (Nondischargeable even under a regular Chapter 13 bankruptcy absent a showing of undue hardship. (§523(a)(8)).

k. Death or Injury Caused While Intoxicated

No discharge for obligations which arose from the debtor operating a vehicle, vessel or aircraft while under the influence, causing death or personal injury. (Non-dischargeable even under a regular Chapter 13 bankruptcy. (§523(a)(9)).

l. Debts From a Prior Bankruptcy Where Discharge was Denied No discharge for obligations which were or could have been listed in a prior bankruptcy in which the debtor waived or was denied their discharge on any of the grounds listed in XVIII B., below. (§523(a)(10)).

m. Federal Restitution Orders

No discharge of federal criminal restitution orders, (§523(a)(13)). n. Property Equalization Obligations

In addition to obligations for alimony maintenance and child support, if there are additional obligations taken on by one of the divorcing spouses which are beyond the scope of alimony, maintenance, or support (i.e. agreeing to pay certain of the pre- divorce community debts), they are also not dischargeable (§523(a)(15)).

o. Condo Fees Coming Due After the Bankruptcy Filing Fees and assessments for condominiums and cooperative

associations that become due and payable after the filing of the bankruptcy are nondischargeable but only to the extent that the period of the assessment is after the filing. The other limitation is that the debtor either physically occupied the unit or rented the unit and received rents during the period. (§523(a)(16)).

p. Filing Fees for Prisoner Litigation

In 1996, Congress added a new exception to discharge “for a fee imposed by a court for the filing of a case, motion, complaint, or appeal, or for other costs and expenses assessed with respect to such filing”. This was supposed to deal with frivolous litigation by prisoners (It was passed in the “Prison Litigation Reform Act”). Unfortunately, it does not contain limiting language and may take in any cost or expense imposed by a court in litigation. (§523(a)(17)).

q. Amounts Owed on Pension Loans

If amounts are owed on pension loans they are not dischargeable in bankruptcy. (§523(a)(18)).

1. In order for a debt specified under XVIII A.3.b., f., or h., above, to be nondischargeable, a timely complaint must be filed in the Bankruptcy Court and the court must specifically find the debt nondischargeable. All other debts listed above are nondischargeable without court action. Unless the court extends the time, a discharge action must be filed not later than 60 days after the 341(a) meeting of creditors.

2. If a creditor files an action for nondischargeability against a debtor on a consumer debt and the creditor loses, he must pay the debtor's attorneys’ fees and costs if the court determines the suit was not substantially justified.

3. Just to make matters more complicated in the area of nondischargeable debts, in 1996 Congress added two more provisions denying discharge that can't even be found in the Bankruptcy Code. They are as follows:

a. The “Anti-Terrorism and Effective Death Penalty Act of 1996” had a buried provision that makes a whole new area of debts nondischargeable. Title 18 (Criminal and Penal Code) of the United States Code, §3613 now contains a provision which make fines and orders of restitution owing to the United States nondischargeable and liens supporting those fines and restitution orders enforceable.

b. The other new nondischargeability provision is even more convoluted in its application but fortunately has a much more limited scope. Section 302g of Title 37 of the United States Code has been amended to add new subsections (d) and (e). It makes nondischargeable any reimbursement due for special pay received by a health care professional acting in the military reserves who prematurely voluntarily terminates services in the reserve.