The bankruptcy code provides Illinois residents with a way to escape unmanageable financial situations, but there are some debts that cannot be included in a bankruptcy. These are known as nondischargeable debts, and they include student loans, unpaid income taxes and delinquent child or spousal support. Creditors can also petition the bankruptcy court to exclude certain other debts, but these requests are unlikely to be approved unless the debts were accrued through acts of malfeasance.
Drunk driving and reckless spending
Obligations stemming from damages awarded in personal injury lawsuits can usually be included in a consumer bankruptcy, but an exception is made when the debtor was sued because they caused injury, loss or damage by operating a vehicle while under the influence of alcohol or drugs. Debts that would normally be dischargeable may also be excluded if they were accrued shortly before a bankruptcy was filed. Bankruptcy judges may exclude debts when credit cards are used to purchase luxury goods within 90 days of a bankruptcy or obtain large cash advances within 70 days of a bankruptcy. Credit card debt could also be excluded when the money was used to pay nondischargeable debts like unpaid taxes.
Willful injury and fraud
Other debts that a bankruptcy judge may deem nondischargeable include obligations incurred because the petitioner willfully and maliciously injured another person and debts obtained through fraud or false pretenses. Credit card or loan debt may be excluded if it was only obtained because the applicant lied about their income or obligations, and judges may grant requests to exclude debts when debtors have concealed assets or destroyed their financial records.
Legal help with bankruptcy petitions
Attorneys with debt relief experience may advocate on behalf of bankruptcy petitioners when their creditors request to have debts excluded. Attorneys could argue that credit card purchases and cash advances should not be excluded because the petitioner did not purchase luxury items and genuinely intended to repay the money. Attorneys could also seek to include student loan debt in a Chapter 7 bankruptcy if making the monthly payments would cause the petitioner undue hardship.