When you are considering bankruptcy, you are likely in such a financial bind that you are trying to eliminate as much debt as possible. Your attorney will likely explain that some debt is dischargeable and some is nondischargeable. For now, let’s focus on non-dischargeable debt incurred during a car accident. 

Nondischargeable Debt

Nondischargeable debt cannot be eliminated when you file bankruptcy. Examples of nondischargeable debt are taxes (federal, state, and local), money on a credit card to pay taxes, student loans, and child support or alimony payments. Other debts could be nondischargeable, but that typically occurs when a creditor objects to the discharge. Debts from a marital settlement or divorce decree fall under this category. 

Other nondischargeable debts are those that are legally questionable. For example, debts that were incurred through fraudulent behavior, embezzlement, larceny, or a breach of fiduciary responsibility fall into this category. So do debts incurred through willful or malicious acts against someone else or their property.

Dischargeable Debt

Dischargeable debt is the debt that can be eliminated through a bankruptcy filing. Discharged debt means the individual is released from liability for that debt. Creditors can no longer take collection actions to satisfy a debt that has been discharged through bankruptcy. 

Secured and unsecured debts are treated differently in bankruptcy. Secured debts are those that are attached to collateral. Unsecured debts are those to which there is no property attached, and they are divided into priority and nonpriority categories. 

Priority unsecured debts get paid first. These aren’t dischargeable. Nonpriority unsecured debts are only paid if money is left after paying priority debts. Nonpriority debts aren’t dischargeable in bankruptcy. 

Chapter 7 Bankruptcy and Debt Discharge

For the most part, when someone files for a Georgia Chapter 7 bankruptcy, most of their debts are discharged at the completion of the bankruptcy. However, there are some types of debt that cannot be discharged. Generally, civil liability as a result of a personal injury case, such as a car accident, is dischargeable under a Chapter 7 bankruptcy. However, there are two major exceptions where a damages award is not dischargeable.

The first exception deals with property damage that resulted from the filer’s conduct. Generally, property damage is dischargeable in a Chapter 7 or Chapter 13 bankruptcy. However, under section 523(a)(6), damage that is “caused by willful and malicious injury by the debtor to another entity or to the property of another entity” is not dischargeable. The U.S. Supreme Court interprets the use of the term “willful” in this section to require a willful intent to cause injury, rather than engaging in willful conduct. Thus, debt related to property damage is only nondischargeable in situations where a person’s conduct was malicious or intended to cause injury. Section 523(a)(6) applies only to Chapter 7 bankruptcies; all debt related to property damage is dischargeable through a Chapter 13 bankruptcy.

The second exception to the general rule that all debt related to civil liability is dischargeable is when the debt is related to a DUI accident. Under section 523(a)(9), the court cannot discharge debt that is related to personal injuries caused by operating a vehicle while intoxicated. Section 523(a)(9) applies to both Chapter 7 and Chapter 13 bankruptcies.

Many DUI accidents involve both civil and criminal prosecutions. Criminal prosecutions seek to hold a defendant accountable for their violation of the law, whereas civil cases are designed to compensate accident victims for their injuries. The burden of proof is higher in a criminal case that in a civil case, and bankruptcy proceedings are civil cases. Thus, a bankruptcy court is not bound by an acquittal in a criminal case, and can engage in its own analysis to determine if the related debt should be discharged through bankruptcy.

Chapter 7 Versus Chapter 13

Chapter 13 allows some debts to be discharged that Chapter 7 doesn’t allow. For example, Chapter 13 will enable you to discharge debt that comes from willful and malicious damage to someone else’s property. In other words, if you are in a case that determined the damage you caused was intentional, but you didn’t willfully hurt anyone else. 

Most debts can be discharged during bankruptcy, with a few exceptions. If you know beyond a shadow of a doubt that you won’t be able to repay your debts, you will likely want to go with a Chapter 7 filing. Under a Chapter 7 filing, your debts will be automatically discharged approximately four months after filing. 

Some kinds of legal judgments can be discharged if they are related to unsecured debt. For instance, judgments related to crimes, like DUI, are not dischargeable. 

Some debts can never be discharged. Those include court fines, penalties, and fees. It also includes debt from personal injury cases. So, if you have been sued because of a car accident, and there has been a judgment against you in a personal injury case, that debt will likely remain intact.

If you feel like you may be able to repay some of your debts, you might consider filing for Chapter 13 bankruptcy. With Chapter 13, you will be given a repayment plan that you must commit to. You will be committed to the repayment plan for 5 to 7 years. Chapter 13 plans often allow you to discharge things, at the court’s discretion, that Chapter 7 plans don’t allow. 

Talk to A Qualified Bankruptcy Attorney in Georgia

Bankruptcy rules and regulations can be pretty confusing for someone who doesn’t work in the legal profession. There are exemptions, dischargeable debts, nondischargeable debts, and repayment plans to consider. When it comes to dischargeable debts, some are always discharged, some are rarely discharged, and some are never discharged. 

Then there’s the difference between Chapter 7 and Chapter 13. In some cases, more things can be discharged through Chapter 13 than Chapter 7, but you have to consent to a repayment plan that you can commit to following. For some people, a repayment plan simply isn’t doable. 

In Georgia, there are rules regarding exemptions, such as you can’t claim federal exemptions, only state ones. You can claim federal non-exemptions, though. Additionally, you must live in the state for a specific amount of time before filing bankruptcy. 

Before filing bankruptcy, consider speaking to an attorney specializing in bankruptcy like those from Morgan & Morgan. Someone with the proper training in the legal ramifications of filing bankruptcy can help you determine if it’s the right choice for you based on your specific case. 

If you are considering filing for a Georgia bankruptcy, and are not sure what type of bankruptcy is right for you, and whether your debts are likely to be discharged, contact the dedicated Georgia bankruptcy attorneys at the law firm of Morgan & Morgan, P.C. To learn more, call (706) 752-7089 to schedule a free consultation today.