Filing for bankruptcy often feels like a turning point, a chance to finally get relief from overwhelming debt. Many people expect that once the case is over, everything will be wiped clean and they can move forward without looking back. The reality is more complicated, and some debts do not go away no matter how strong your case may be. If you are considering bankruptcy in New Jersey, knowing which debts stay with you can make all the difference before you file.
The Bankruptcy Code sets clear limits on what can be discharged, and those limits catch many people off guard. Even honest and careful filers can finish their case only to realize certain obligations are still waiting for them. This is not a mistake or a rare outcome, but a built-in part of how the law works. Taking the time to review these rules early can help you avoid surprises later.
Why Do Some Debts Survive Bankruptcy?
Bankruptcy is intended to give people a fresh start, but it does not eliminate every type of obligation. Federal law specifically protects certain debts from discharge, particularly those related to family support or misconduct. These rules reflect concerns about fairness and accountability. As a result, even a successful bankruptcy case may leave a person responsible for several categories of debt.
These exceptions are established by federal law and apply in all states, including New Jersey. Courts generally interpret these exceptions narrowly, but they are frequently enforced. It is common for debtors to have at least one non-dischargeable debt in a bankruptcy filing. Understanding which debts may survive can help individuals make more informed decisions before filing.
Child Support and Alimony
Child support and alimony are among the most protected debts in bankruptcy. These obligations, known as domestic support obligations, cannot be discharged under any chapter of bankruptcy under 11 U.S.C. § 523(a)(5). This includes both ongoing payments and any past-due amounts.
In New Jersey, enforcement of child support and alimony can continue even while a bankruptcy case is pending. Wage garnishments, license suspensions, and other collection methods may still be used. Bankruptcy does not halt these actions in the same way it can delay other creditors. For individuals who are behind on payments, Chapter 13 bankruptcy may provide a structured repayment plan to catch up over time, but the debt itself remains enforceable.
Most Tax Debts
Tax debts are often misunderstood, and many people assume they can never be discharged. In fact, some older income tax debts may be discharged if strict federal timing rules are met. These rules consider how long ago the tax return was due, when it was actually filed, and when the tax was assessed. If all conditions are satisfied, the debt may be eligible for discharge under 11 U.S.C. § 523(a)(1).
Certain tax obligations are always non-dischargeable. These include recent income taxes, payroll taxes, fraud-related taxes, and taxes arising from willful tax evasion. The same federal analysis applies to New Jersey state income taxes because bankruptcy law is federal. Careful review of your tax history with a qualified attorney is essential before filing to determine which debts may or may not be discharged.
Student Loans
Student loans are generally non-dischargeable in bankruptcy under 11 U.S.C. § 523(a)(8). To attempt a discharge, a debtor must file a separate adversary proceeding within the bankruptcy case. The court then applies a legal standard to determine whether repayment would impose an undue hardship. This is not automatic and requires detailed evidence of income, expenses, and financial circumstances.
In New Jersey, which is part of the Third Circuit, courts use the Brunner test to evaluate undue hardship. This test considers the debtor’s current and future ability to earn, whether the debtor has made a good faith effort to repay the loans, and the likelihood that the financial situation will continue. Recent federal guidance has made the process somewhat more accessible for federal student loans, and in certain cases full or partial discharges have been granted. However, outcomes vary, and not every case meets the required standard.
Debts Involving Fraud or Misrepresentation
Debts that are obtained through fraud, false pretenses, false representation, or actual fraud may be non-dischargeable under 11 U.S.C. § 523(a)(2). A creditor must typically file an adversary proceeding within the bankruptcy case to challenge dischargeability. In most cases, this challenge must be filed within 60 days of the first meeting of creditors, although the court may allow an extension in certain circumstances.
Federal law also includes specific presumptions for recent charges before filing. If a debtor makes luxury purchases exceeding $900 within 90 days before filing or takes cash advances totaling more than $1,250 within 70 days before filing, those debts are presumed to be non-dischargeable. These thresholds were updated effective April 1, 2025, and apply to current bankruptcy cases.
Debts from Intentional Harm
Debts resulting from willful and malicious injury may be non-dischargeable in bankruptcy under 11 U.S.C. § 523(a)(6). The focus is on whether the act causing harm was intentional and deliberate, not just whether damage or injury occurred. This can include personal injury to another person or damage to their property.
Courts examine the specific facts of each case to determine if the legal standard for willful and malicious conduct is met. Debts arising from intentional personal injury or property damage typically survive bankruptcy, even if a judgment was entered before filing. However, not all harm from deliberate acts is automatically non-dischargeable. For example, property damage that is not willful and malicious may still be discharged. The nature of the act matters more than the mere fact that a judgment exists.
Fines, Restitution, and Government Penalties
Debts owed to government entities are generally non-dischargeable under 11 U.S.C. § 523(a)(7). This includes criminal fines, restitution orders, and certain civil or regulatory penalties. These obligations are treated differently from typical debts because they serve a public purpose. Bankruptcy does not eliminate the responsibility to pay them.
In New Jersey, this includes municipal court fines and criminal restitution. Filing for bankruptcy will not remove these debts or halt enforcement actions tied to them. These obligations remain enforceable regardless of the outcome of a bankruptcy case. It is important to plan in advance for how these debts will be managed during and after the bankruptcy process.
Drunk Driving Debts
Debts arising from death or personal injury caused by driving under the influence are non-dischargeable under 11 U.S.C. § 523(a)(6). If a court has determined that you are responsible for damages from a DUI incident, that liability survives bankruptcy. This applies whether the liability arises from civil or criminal proceedings.
The law treats these cases seriously because the conduct is considered willful and malicious. Bankruptcy does not relieve individuals of responsibility for harm caused by driving under the influence. Even after a bankruptcy case is completed, the debt for injuries or death resulting from a DUI remains enforceable. Debtors should understand these obligations clearly before filing.
Fiduciary Fraud, Embezzlement, and Theft
Debts arising from fraud or defalcation while acting in a fiduciary capacity are non-dischargeable under 11 U.S.C. § 523(a)(4). This includes misconduct by trustees, business partners, or anyone handling money or property for others. Courts give particular attention to these cases because they involve a breach of trust or responsibility, and the resulting debts generally survive bankruptcy.
This category also includes embezzlement and theft, even outside a formal fiduciary role. If a court has already issued a judgment, that judgment is usually recognized in the bankruptcy case. The focus is on the nature of the conduct that created the debt. If the debt resulted from misuse of funds, misappropriation, or theft, it is unlikely to be discharged.
Chapter 7 vs. Chapter 13
The type of bankruptcy a person files can affect how non-dischargeable debts are handled. In Chapter 7, the process moves quickly, and any remaining non-dischargeable debts remain due after the case ends. Chapter 7 does not provide a repayment plan for these debts, which can result in immediate collection once the case is closed.
Chapter 13 works differently by creating a court-approved repayment plan over three to five years. This allows a debtor to repay certain debts over time rather than all at once. While non-dischargeable debts are not eliminated, the structured plan can make them more manageable. For many individuals, Chapter 13 offers a more practical way to address obligations that survive bankruptcy.
Secured Debts
Secured debts, such as mortgages and car loans, are treated differently from unsecured debts. Even if a debtor’s personal obligation is discharged in bankruptcy, the lender’s lien on the property remains. This means the lender can still repossess or foreclose on the property if payments are not made. Bankruptcy does not eliminate this right.
If a debtor wants to keep the property, they must stay current on payments. Falling behind can result in foreclosure or repossession, regardless of whether the case is filed under Chapter 7 or Chapter 13. Understanding the distinction between discharging personal liability and the survival of liens is important when deciding how to proceed with secured property.
Key Takeaways
- Bankruptcy can eliminate many debts, but 11 U.S.C. § 523 identifies several obligations that survive discharge.
- Child support, alimony, and most divorce-related property settlement debts are always non-dischargeable in New Jersey.
- Most tax debts are non-dischargeable, but older income taxes may be eligible for discharge if strict timing requirements under federal law are met.
- Student loans generally require a separate court proceeding and a showing of undue hardship. New Jersey courts follow the Brunner test, and recent federal guidance has made discharge somewhat more attainable for certain federal loans.
- Debts arising from fraud, willful injury, embezzlement, or death or personal injury caused by drunk driving are not dischargeable.
- Criminal fines, restitution, and government penalties survive discharge under all chapters of bankruptcy.
- Chapter 13 allows repayment of non-dischargeable debts through a structured plan, which can make managing them more realistic than facing them all at once.
- Consulting a New Jersey bankruptcy attorney before filing can help prevent unexpected consequences and ensure you understand which debts will survive your case.
Frequently Asked Questions
Can I discharge back child support in a New Jersey bankruptcy?
No. Child support arrears are completely non-dischargeable under 11 U.S.C. § 523(a)(5). Domestic support obligations survive both Chapter 7 and Chapter 13 bankruptcy cases without exception. Chapter 13 may allow you to catch up on arrears through a repayment plan, but the debt itself does not disappear.
What if I owe New Jersey state income taxes? Can those be discharged?
Possibly, but only for certain older tax years. New Jersey state income tax debts are analyzed under federal bankruptcy discharge rules. Generally, a tax debt may be dischargeable if all of the following conditions are met:
- The tax return was due at least three years before filing.
- The return was actually filed at least two years before filing.
- The tax was assessed at least 240 days before filing.
Taxes associated with fraud or willful tax evasion are never dischargeable. Tax law is complex, so it is important to review your specific tax history with a bankruptcy attorney before assuming anything is dischargeable.
Is it really possible to discharge student loans in New Jersey bankruptcy court?
Yes, but it is difficult. Discharging student loans requires filing a separate adversary proceeding and proving undue hardship under the Brunner test. Courts in New Jersey, which is part of the Third Circuit, use this test, which examines the debtor’s current and future financial situation and whether the debtor has made a good faith effort to repay. Federal guidance in recent years has made the process slightly more accessible for certain federal loans, but full or partial discharges remain rare. Each case is evaluated individually.
I have a civil judgment against me in New Jersey state court. Will bankruptcy wipe it out?
It depends on the nature of the judgment. Judgments for contract disputes, medical bills, or most unsecured debts may be discharged. Judgments resulting from intentional fraud, willful injury, embezzlement, or death or personal injury caused by drunk driving are generally non-dischargeable under 11 U.S.C. § 523(a). The underlying cause of the judgment, not the mere fact of the judgment, determines whether it survives bankruptcy. An attorney can review the judgment to assess dischargeability.
Does filing Chapter 13 instead of Chapter 7 help with non-dischargeable debts?
Yes. Chapter 13 allows you to repay certain non-dischargeable debts, such as domestic support obligations and tax arrears, through a court-supervised repayment plan over three to five years. This can prevent aggressive collection actions during the plan and make repayment more manageable. Chapter 13 does not eliminate non-dischargeable debts but provides a structured way to address them.
Can fines from New Jersey municipal court be discharged in bankruptcy?
No. Municipal court fines, traffic tickets, and criminal restitution are non-dischargeable under 11 U.S.C. § 523(a)(7). Filing for bankruptcy does not satisfy these obligations and does not lift any license suspensions or other penalties tied to unpaid fines.
Talk to a Bridgewater Bankruptcy Attorney Today
Knowing what bankruptcy can and cannot do for you is the first step toward making a confident decision about your financial future. At Karina Lucid Law in Bridgewater, New Jersey, we work with real people facing real debt problems and we tell them the truth about what to expect before they ever sign a single document.
Whether you are dealing with tax debt, a looming foreclosure, overwhelming credit card bills, or the uncertainty of whether your debts are even dischargeable, we are here to help you figure out the best path forward. There is no obligation, no judgment, and no confusing legal jargon. Just a straightforward conversation about your situation.
Schedule a free consultation with us today.
