Non Dischargable Debts and Personal Property Exemptions

Bankruptcy does not eliminate all debts. Nondischargeable debts relate primarily to a Chapter 7 bankruptcy. A discharged debt is one that is forgiven by law, by the court. A nondischargeable debt is not forgiven. The court will sell your assets to repay creditors any amounts owed to them.

If you have certain debts payable to private individuals or governmental agencies, even after bankruptcy you will still be responsible to pay those debts or face additional legal action. Bankruptcy petitioners are required to receive a "hardship determination" to have certain debts discharged through bankruptcy. The courts will look for evidence of a precarious situation whereby the petitioner has no possible means, under any set of circumstances to make certain payments.

Even if hardship is established, the courts are not under any obligation to discharge certain debts, which under the new bankruptcy law could in fact follow you for the rest of your life (accruing both interest and late penalties).

These debts include:

  • Child Support
  • Alimony
  • Victim's Compensation (Personal injury claims)
  • Any claim in which the petitioner was under the influence of any substance orintoxicated, resulting in a personal injury lawsuit.
  • Wrongful death claims
  • Criminal Restitution Payments
  • Property damages claims
  • Certain taxes
  • Student loans . or other loans guaranteed by a governmental agency.
  • Debts incurred under false pretenses . for all monies or property obtained.
  • Debts incurred within 60 days of filing for bankruptcy, where the debts are for luxury goods with an aggregate value of $1,000.
  • Taxes incurred within 3 years of filing for bankruptcy
  • Customs duties
  • Student loans (with limitations)
  • Cash advances against a credit card within 60 days of filing for bankruptcy
  • Debts remaining from a past bankruptcy

Federal Bankruptcy Personal Property Exemptions

Personal and Real Property:

  1. Household: Up to $425.00 per item not to exceed a total of $8,625.00 (includes animals, appliances, books, crops, furnishings, household goods, clothing, musical instruments)
  2. Jewelry: Up to $1,075.00
  3. Vehicles: Up to $2,575.00
  4. Work tools (implements, books and tools of trade): Up to $1,625.00
  5. Health aides (wheelchair, etc.): Unlimited
  6. Burial plot: Up to $16,500.00 (in lieu of real estate exemption)
  7. Real estate (house, co-op or mobile home): Up to $16,150.00
  8. Any property: Up to $8,075.00 of unused portion of real estate exemption

Wages, Pensions, Recoveries and Benefits:

  1. Wages: None
  2. Wrongful death funds: Amount needed for support
  3. Personal injury funds: Up to $16,500.00 (excluding that for pain and suffering or pecuniary loss)
  4. Lost earnings payments: Unlimited amount
  5. Retirement benefits: Amount needed for support
  6. Alimony / child support: Amount needed for support
  7. Unemployment compensation: Unlimited amount
  8. Veterans benefits: Unlimited amount
  9. Social security benefits: Unlimited amount
  10. Public assistance: Unlimited amount
  11. Crime victims compensation: Unlimited amount


  1. Disability: Unlimited amount
  2. Unemployment benefits: Unlimited amount
  3. Unmatured life insurance: Unlimited amount
  4. Life insurance policy loan value, dividends or interest: Up to $8,625
  5. Life insurance proceeds: Amount needed for support

<<Part 6: Attoney Verification | Part 8: The Next Bankruptcy Reform>>

Not all states allow the use of federal bankruptcy property exemptions.

Federal Exemptions Allowed Federal Exemptions Not Allowed
Arkansas Alaska
Connecticut Arizona
Hawaii California
Massachusetts Colorado
Michigan Delaware
Minnesota Florida
New Jersey Georgia
New Mexico Idaho
Pennsylvania Illinois
Rhode Island Indiana
South Carolina Iowa


Vermont Kentucky
Washington Louisiana
Washington D.C. Maine
Wisconsin Maryland
New Hampshire
New York
North Carolina
North Dakota
South Dakota
West Virginia

Bankruptcy Filing

Creditor Friendly States Debtor Friendly States
Idaho Alaska
Indiana Connecticut
Kentucky Delaware
Missouri Massachusetts
Nevada New Hampshire
Ohio New York
Oklahoma North Carolina
Oregon South Carolina
Utah Texas
West Virginia Vermont

<<Part 6: Attoney Verification | Part 8: The Next Bankruptcy Reform>>

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