When Dudley files his Chapter 7 petition, he lists the following debts:
a. $25,000 in back child support and alimony.
b. $15,000 for liabilities incurred after drinking and driving.
c. $10,000 for past-due student loans.
d. $5,000 for past-due rent to his landlord.
e. $550 for a past-due phone bill.
How will each of these debts be treated by the bankruptcy court.
Certain debts are never discharged and the debtor is fully liable for the debts even after receiving a discharge from the bankruptcy court. These types of debts are generally denied a discharge based on public policy reasons. In this example, the child support and alimony, the liabilities for operating a motor vehicle while under the influence, and school loans guaranteed by the government (unless undue hardship can be established) are nondischargeable debts. Bankruptcy has no effect on these debts. The unpaid rent and phone bill generally will be discharged.
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