What Debts Can’t Be Discharged in North Carolina Bankruptcy?

When facing financial difficulties, many individuals in North Carolina consider bankruptcy as a viable solution. However, it is essential to understand that not all debts can be discharged through bankruptcy proceedings. Knowing what debts cannot be wiped out can help you strategize effectively and prepare for life after bankruptcy.

In North Carolina, certain types of debts are non-dischargeable in bankruptcy. Here’s a comprehensive breakdown:

1. Child Support and Alimony

One of the most critical areas of non-dischargeable debts involves family obligations. Child support and spousal support obligations must be paid in full, regardless of the bankruptcy filing. The courts prioritize these payments to ensure the welfare of dependents.

2. Most Tax Debts

While some older tax debts may be discharged, many taxes owed to the IRS or state tax agencies are considered priority debts. Generally, income tax debts that are less than three years old, or those that were not filed on time, cannot be discharged. This includes any tax-related penalties as well.

3. Student Loans

Discharging student loans in North Carolina bankruptcy is exceptionally challenging. Unless you can prove undue hardship—a high bar that requires specific conditions to be met—most student loans will remain intact even after bankruptcy proceedings.

4. Personal Injury Debts

Debts resulting from personal injury claims where the debtor was found to be liable, particularly in cases involving DUI or willful misconduct, cannot be discharged. This means if you are responsible for an injury to someone else, you will still be liable for those payments post-bankruptcy.

5. Fines and Restitution

Any court-imposed fines, penalties, or restitution ordered for criminal activity are also non-dischargeable. This emphasizes the legal system’s stance on accountability for criminal actions, ensuring that such debts are honored even in bankruptcy.

6. Debts Incurred through Fraud

If debts were generated through fraudulent means, such as making false statements on credit applications, these debts will not be discharged in bankruptcy. Creditors have the right to challenge dischargeability if they suspect fraud.

7. Debts Owed to Government Entities

Debts to government agencies, including loans administered by government programs or obligations arising from government guarantees (such as certain types of federal loans), are typically not dischargeable. This also includes debts related to unemployment compensation and obligations to the government.

8. Cooperative Housing Fees

If you owe fees or assessments related to cooperative housing, these debts cannot be discharged in bankruptcy. This includes fees that are due to a cooperative corporation.

Understanding what debts cannot be discharged in North Carolina bankruptcy is crucial for making informed financial decisions. While bankruptcy can provide relief from many types of unsecured debts, knowing that certain obligations will survive can help you prepare for the steps ahead. Consulting with a bankruptcy attorney is advisable to get personalized guidance tailored to your situation.