Section 523: Nondischargeable Debts in Bankruptcy

Not every debt goes away in bankruptcy. Section 523 lists the exceptions -- debts you still owe even after discharge.

What are nondischargeable debts?

When you file bankruptcy, the goal is usually a discharge -- a court order that wipes out your legal obligation to pay certain debts. But some debts are excluded from that relief. These are called nondischargeable debts.

11 U.S.C. Section 523 lists 19 categories of debts that can survive bankruptcy. If your debt falls into one of these categories, you still owe it after your case ends -- even if you completed the entire process and received a discharge on everything else.

Common nondischargeable debts

Most tax debts -- Section 523(a)(1)

Tax debts are generally nondischargeable, but there is an important exception. Income taxes can be discharged if they pass all three of these timing tests:

1. 3-year rule: The tax return was due more than 3 years before the bankruptcy filing date (including extensions).
2. 2-year rule: The tax return was actually filed more than 2 years before the bankruptcy filing date.
3. 240-day rule: The tax was assessed by the IRS or state tax authority more than 240 days before the bankruptcy filing date.

Student loans -- Section 523(a)(8)

Student loans -- both federal and private -- are presumed nondischargeable. The only exception is if the debtor proves undue hardship through a separate lawsuit within the bankruptcy case (called an adversary proceeding).

Most courts apply the Brunner test, established in Brunner v. New York State Higher Education Services Corp., 831 F.2d 395 (2d Cir. 1987). The debtor must show:

1. They cannot maintain a minimal standard of living while repaying the loan.
2. This situation is likely to persist for a significant portion of the repayment period.
3. They made good-faith efforts to repay the loan.

This is a high bar, but not impossible. Courts have granted student loan discharges in cases involving severe disability, chronic illness, or advanced age with no prospect of increased income.

Child support and alimony -- Section 523(a)(5)

Domestic support obligations -- child support, alimony, spousal maintenance -- are always nondischargeable. This applies in every chapter of bankruptcy, with no exceptions. The obligation follows the debtor regardless of the type of case filed.

Debts from fraud -- Section 523(a)(2)

Debts incurred through false pretenses, false representations, or actual fraud are nondischargeable. This includes:

• Obtaining money, property, or services through lies or deception
• Written statements about your financial condition that are materially false
• Credit card charges for luxury goods or services over $800 within 90 days before filing
• Cash advances totaling more than $1,100 within 70 days before filing

The creditor must typically file an adversary proceeding to have the debt declared nondischargeable. The Supreme Court held in Grogan v. Garner, 498 U.S. 279 (1991), that the creditor must prove fraud by a preponderance of the evidence -- not the higher "clear and convincing" standard.

In Cohen v. de la Cruz, 523 U.S. 213 (1998), the Supreme Court further held that when a debt is found nondischargeable due to fraud, the entire debt is excepted from discharge -- including treble damages and attorney fees, not just the original amount obtained by fraud.

DUI / DWI injury debts -- Section 523(a)(9)

Debts for death or personal injury caused by the debtor's operation of a motor vehicle while intoxicated are nondischargeable. This covers drunk driving, drugged driving, and similar offenses. It applies in both Chapter 7 and Chapter 13.

Debts not listed on schedules -- Section 523(a)(3)

If a creditor was not listed on your bankruptcy schedules and did not receive notice of your case in time to file a proof of claim or an adversary proceeding, the debt may be nondischargeable. This is why it is critical to list every creditor when filing -- even debts you believe are small, disputed, or already paid.

Government fines and penalties -- Section 523(a)(7)

Fines, penalties, and forfeitures owed to a governmental unit are generally nondischargeable in Chapter 7. This includes traffic tickets, tax penalties, and regulatory fines. However, this category is treated differently in Chapter 13 -- see below.

Chapter 7 vs. Chapter 13: the super discharge difference

One of the most important features of Chapter 13 is its broader discharge, sometimes called the "super discharge." Certain debts that are nondischargeable in Chapter 7 can be discharged in Chapter 13.

Debt type	Ch. 7	Ch. 13	Section
Property settlement debts from divorce	Survives	Dischargeable	523(a)(15)
Willful and malicious injury to property	Survives	Dischargeable	523(a)(6)
Government fines and penalties (non-criminal)	Survives	Dischargeable	523(a)(7)
Post-petition HOA / condo fees	Survives	Dischargeable	523(a)(16)
Student loans	Survives	Survives	523(a)(8)
Child support / alimony	Survives	Survives	523(a)(5)
Fraud debts	Survives	Survives	523(a)(2)
DUI injury debts	Survives	Survives	523(a)(9)

Key case law

Brunner v. New York State Higher Education Services Corp., 831 F.2d 395 (2d Cir. 1987)

Established the dominant test for student loan undue hardship. The three-part Brunner test requires showing inability to maintain a minimal standard of living, that the hardship is likely to persist, and good-faith repayment efforts. Most circuits have adopted this test, though the 1st and 8th Circuits use the broader "totality of the circumstances" approach.

Grogan v. Garner, 498 U.S. 279 (1991)

The Supreme Court held that creditors seeking to except a debt from discharge under Section 523(a) need only prove their case by a preponderance of the evidence, not by clear and convincing evidence. This applies to fraud, willful injury, and other 523(a) exceptions. The lower standard makes it easier for creditors to establish nondischargeability.

Cohen v. de la Cruz, 523 U.S. 213 (1998)

The Supreme Court held that the fraud exception under Section 523(a)(2)(A) covers the entire debt, not just the amount originally obtained by fraud. This means treble damages, punitive damages, attorney fees, and other components of a fraud judgment are all nondischargeable once the underlying fraud is established.

What you can do

If you have debts that may be nondischargeable, here are practical steps:

1. Identify your debts by category. Compare each debt against the Section 523(a) exceptions. Tax debts, student loans, and support obligations each have different rules.
2. Check the timing rules for taxes. Tax debts are the most common type with a potential path to discharge. Run the 3-year, 2-year, and 240-day calculations before filing.
3. Consider Chapter 13 for the super discharge. If your nondischargeable debts include property settlements, willful property damage, or government fines, Chapter 13 may be able to discharge them where Chapter 7 cannot.
4. List every creditor on your schedules. Failing to list a creditor can make an otherwise dischargeable debt nondischargeable under Section 523(a)(3).
5. Avoid last-minute credit card charges. Luxury purchases over $800 within 90 days or cash advances over $1,100 within 70 days create a presumption of fraud.
6. Talk to a bankruptcy attorney about adversary proceedings. Some nondischargeable debts (fraud, willful injury) require the creditor to file a complaint. If they miss the deadline, the debt may be discharged by default.

Related resources

• What Is a Super Discharge? -- Detailed guide to Chapter 13's broader discharge
• Section 1328(f) Explained -- The repeat-filing discharge bar
• Can I File Bankruptcy Again? -- Timing rules for repeat filings
• Dismissed vs. Discharged -- What each outcome means for your debts
• Chapter 7 Overview -- How liquidation bankruptcy works
• Chapter 13 Overview -- How the repayment plan works
• Glossary -- Bankruptcy terms in plain language

Legal references

• 11 U.S.C. Section 523 -- Exceptions to discharge
• 11 U.S.C. Section 1328 -- Discharge (Chapter 13)
• 11 U.S.C. Section 727 -- Discharge (Chapter 7)
• 11 U.S.C. Section 524 -- Effect of discharge
• BAPCPA, Pub. L. 109-8, 119 Stat. 23 (2005)
• Bankruptcy Basics -- U.S. Courts

Related Statutes

• §524: Discharge Injunction
• §727: Chapter 7 Discharge
• §1141: Chapter 11 Discharge
• §341: Meeting of Creditors