Secured debts are debts that are secured by property. For example, a house is secured by a mortgage. An auto is secured by the auto loan. If a person wants to keep those items in a chapter 7 bankruptcy, he must continue to make the current monthly payment on those items. So take the example of a house, if a person decides to keep the house, he needs to make the regular first and/or second mortgage payments. Otherwise, the lender can eventually take the house back.

The same thing applies as to an auto, although it happens much quicker with an auto. If a person fails to make his current monthly auto payment, the auto lender can ask permission of the bankruptcy court to recover the vehicle. There are several debts that are not eliminated in a chapter 7 and they’re important to note. Student loans are not eliminated in any case except where there is a showing of an extreme hardship.

An extreme hardship is very difficult to prove. Someone basically has to be completely incapacitated without any ability to make money and pay the debt back. So student loans, are the number one, non-dischargeable debt. Student loans are going to stick around. The second important non-dischargeable debt is recent tax debt. And when I say recent, I mean taxes that were incurred within the last three years where a return was not timely filed or where the tax was assessed within 240 days.

So basically, as a general rule of thumb, taxes that are owed within a three year time period of the date of filing are held non-dischargeable and they will be due and owing from the tax payer. So we have student loans and we have tax debt. Another important debt that is not eliminated is alimony, maintenance, and child support. And we can lump these all together under family support.

But basically if you owe child support or if you owe a former spouse maintenance, those debts are not going to be eliminated in any bankruptcy case. And obviously, there’s a reason for that. The government wants to make sure that the family and the children of debtors are made whole and that they’re not lacking from their payments. They want to make sure those people get paid. So that’s another form of non-dischargeable debt, family support obligations pursuant to a court order.

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