Non-Dischargeable Debts -- What Survives Bankruptcy in DC

Bankruptcy eliminates most debts -- but not all of them. Congress has designated certain categories of debt as non-dischargeable, meaning they survive the bankruptcy process and remain your legal obligation after your case concludes. Understanding which debts cannot be eliminated is essential for DC residents evaluating whether bankruptcy will solve their financial problems.

The primary list of non-dischargeable debts is found in 11 U.S.C. Section 523(a). This section contains 19 separate subsections, each addressing a specific type of debt that survives discharge. Some apply automatically. Others require the creditor to file an adversary proceeding and prove its case in court.

Automatic Exceptions to Discharge

Certain debts are automatically non-dischargeable -- the creditor does not need to take any action or file any motion. If the debt falls within these categories, it survives the discharge by operation of law.

Domestic support obligations (Section 523(a)(5)). Child support, spousal support (alimony), and related arrearages are non-dischargeable under any chapter of the Bankruptcy Code. This includes amounts owed directly to a former spouse or child, as well as amounts assigned to a government agency (such as the DC Child Support Services Division). The automatic stay itself does not halt collection of domestic support obligations -- Section 362(b)(2) carves out an exception.

Certain tax debts (Section 523(a)(1)). Income taxes are non-dischargeable if they fail any of three timing tests:

• The three-year rule. The tax return was due (including extensions) within three years before the bankruptcy filing date.
• The two-year rule. The tax return was actually filed less than two years before the filing date.
• The 240-day rule. The tax was assessed by the IRS or DC Office of Tax and Revenue less than 240 days before filing.

If all three conditions are met -- the return was due more than three years ago, was filed more than two years ago, and was assessed more than 240 days ago -- the income tax debt may be dischargeable. Taxes involving fraud or unfiled returns are never dischargeable.

Student loans (Section 523(a)(8)). Federal and private student loans are generally non-dischargeable unless the debtor can demonstrate "undue hardship" in an adversary proceeding. The standard applied in the U.S. District Court for the District of Columbia follows the Brunner test, requiring proof that: (1) you cannot maintain a minimal standard of living while repaying the loans; (2) your financial situation is likely to persist for a significant portion of the repayment period; and (3) you have made good-faith efforts to repay. The Department of Justice issued guidance in 2023 directing U.S. Trustees to apply a less restrictive analysis in certain cases, but the legal standard in DC remains demanding.

Criminal fines and restitution (Section 523(a)(7)). Fines, penalties, and restitution orders arising from criminal proceedings are non-dischargeable. This includes federal criminal restitution and restitution ordered by DC Superior Court in criminal cases.

Government fines and penalties (Section 523(a)(7)). Fines and penalties payable to a governmental unit -- such as DC parking tickets, traffic camera violations, and regulatory penalties -- are non-dischargeable to the extent they are not compensation for actual pecuniary loss.

Debts not listed on schedules (Section 523(a)(3)). If you fail to list a creditor on your bankruptcy schedules and that creditor does not receive timely notice of your case, the debt to that creditor is non-dischargeable. This is why accuracy and completeness in preparing your schedules is critical. Every debt must be listed -- even debts you believe are fully exempt or too small to matter.

Post-petition HOA and condo fees. Homeowners' association fees and condominium assessments that accrue after the bankruptcy filing date are not discharged. Pre-petition arrearages may be dischargeable, but ongoing obligations that arise after filing remain your responsibility as long as you own the property.

DUI-related debts (Section 523(a)(9)). Debts arising from death or personal injury caused by the debtor's operation of a motor vehicle while legally intoxicated are non-dischargeable. This applies to civil judgments and settlements, not just criminal penalties.

Exceptions Requiring an Adversary Proceeding

Other debts are potentially non-dischargeable, but only if the creditor takes affirmative action by filing an adversary proceeding in the bankruptcy court within the applicable deadline -- typically 60 days after the first date set for the Section 341 meeting of creditors.

Debts obtained through fraud or false pretenses (Section 523(a)(2)(A)). If a creditor can prove that you obtained money, property, or services through materially false representations that you made knowingly and that the creditor justifiably relied upon, the debt is non-dischargeable. Common examples include lying on a credit application, obtaining a loan using fabricated financial statements, or purchasing goods with no intention of paying.

Luxury goods and cash advance presumptions (Section 523(a)(2)(C)). As discussed in detail elsewhere on this site, debts for luxury goods exceeding $725 to a single creditor within 90 days of filing and cash advances exceeding $1,000 within 70 days are presumed non-dischargeable. The creditor must still file an adversary proceeding to invoke this presumption.

Fraud or defalcation in a fiduciary capacity (Section 523(a)(4)). Debts arising from fraud, embezzlement, or larceny while acting in a fiduciary capacity are non-dischargeable. This applies to trustees, corporate officers, and others with fiduciary duties.

Willful and malicious injury (Section 523(a)(6)). Debts resulting from intentional harm to another person or their property are non-dischargeable. The creditor must prove that the debtor acted with intent to cause injury -- not merely negligent or reckless conduct. Assault, intentional property destruction, and certain conversion claims fall within this category.

Property settlement debts in divorce (Section 523(a)(15)). In Chapter 7, debts owed to a former spouse arising from a divorce decree or separation agreement are non-dischargeable. This includes property division obligations -- not just support. In Chapter 13, these debts receive different treatment and may be modified through the plan.

The Distinction Matters

The difference between automatic exceptions and those requiring an adversary proceeding is critically important. For automatic exceptions, the creditor does nothing -- the debt simply survives. For adversary proceeding exceptions, the creditor must file a complaint within the deadline. If the creditor fails to act, the debt is discharged even if it would have been found non-dischargeable had the creditor pursued the matter.

This means that a debt potentially non-dischargeable for fraud may still be discharged if the creditor does not file a timely adversary proceeding. The debtor has no obligation to raise the issue.

Practical Implications for DC Filers

Before filing bankruptcy, identify every debt and evaluate whether it falls into a non-dischargeable category. Key steps:

1. Inventory your debts. Classify each debt as secured or unsecured, priority or nonpriority, and potentially non-dischargeable or clearly dischargeable.
2. Run the tax timing tests. If you owe back taxes, apply the three-year, two-year, and 240-day rules to determine whether the taxes might be dischargeable.
3. Assess student loan options. Even though student loans are generally non-dischargeable, review whether an adversary proceeding for undue hardship is viable. The landscape is shifting, and some debtors are obtaining full or partial discharges.
4. List every creditor. Omitting a debt from your schedules does not protect you -- it protects the creditor. Comprehensive disclosure is always in your interest.
5. Consider Chapter 13. Chapter 13 allows you to repay non-dischargeable priority debts -- such as tax arrearages and domestic support obligations -- through a structured plan over three to five years, with interest and penalties halted.

Non-dischargeable debts do not make bankruptcy pointless. Even if certain obligations survive, eliminating dischargeable debts frees up income to address the debts that remain. For most DC filers, the dischargeable debts far outweigh the non-dischargeable ones, and bankruptcy remains a powerful tool for financial recovery.