Stockton Bankruptcy Attorney Alia Khan Explains Which Debts Cannot Be Discharged in Chapter 7

STOCKTON, CA - Individuals considering Chapter 7 bankruptcy in California often discover that federal law prevents certain obligations from being eliminated, even after a successful filing. Stockton bankruptcy attorney Alia Khan of Khan Law (https://akhanlawoffices.com/debts-that-must-be-paid-in-bankruptcy-not-forgiven/) outlines which categories of debt survive a Chapter 7 discharge and explains why filing may still make financial sense for residents of the San Joaquin Valley.

According to Stockton bankruptcy attorney Alia Khan, Chapter 7 effectively eliminates most unsecured consumer debts, including credit card balances, medical bills, personal loans, and old utility accounts. However, federal bankruptcy law lists at least 19 categories of non-dischargeable debt under 11 U.S.C. 523. "Many people come in believing bankruptcy will erase every bill they owe," Khan explains. "Understanding what survives is just as important as understanding what gets eliminated, because that knowledge shapes the entire financial plan."

Stockton bankruptcy attorney Alia Khan emphasizes that domestic support obligations, including current child support, back child support arrears, and spousal support, are always non-dischargeable. The automatic stay does not even pause child support collection during the case. Most student loans also survive Chapter 7 unless the borrower can prove undue hardship through a separate adversary proceeding, typically using the Brunner test established in Brunner v. New York State Higher Education Services Corp.

Tax debts present a more nuanced picture, attorney Khan notes. Some federal income taxes owed to the IRS and California state income taxes owed to the Franchise Tax Board can be discharged, but only if they meet three strict timing requirements: the tax return was due at least three years before filing, the return was actually filed at least two years before filing, and the tax was assessed at least 240 days before filing. "Payroll taxes, trust fund taxes, and any taxes connected to a fraudulent return remain permanently non-dischargeable," she adds.

Khan also addresses how California's community property rules can complicate matters for married filers. Even after a discharge, a creditor holding a non-dischargeable claim against one spouse may still pursue jointly held bank accounts, wages, and other community assets to satisfy the surviving debt. This exposure makes the choice between individual and joint filing a significant strategic decision for couples in San Joaquin County.

The firm guides clients through cases filed in the U.S. Bankruptcy Court for the Eastern District of California, Sacramento Division, and serves communities across San Joaquin County including Stockton, Tracy, Lodi, and Manteca. Court-ordered criminal fines, restitution, and debts arising from fraud, embezzlement, or willful and malicious injury are also non-dischargeable, though the latter category requires the creditor to file a timely adversary proceeding within 60 days of the first meeting of creditors. Federal law also creates a presumption of fraud for luxury goods or services purchased from a single creditor totaling more than $900 within 90 days of filing, and for cash advances totaling more than $1,250 within 70 days of filing.

"Even when student loans or back child support cannot be wiped out, eliminating thousands in credit card and medical debt frees up monthly income to address those remaining obligations," Khan points out. A typical filer carrying credit card debt, medical bills, and back support may use Chapter 7 to clear the dischargeable portion and redirect freed-up funds toward catching up on what remains. The automatic stay also temporarily halts most collection efforts during the case, including wage garnishments, collection calls, and most lawsuits, though support obligations are excepted.

For California residents weighing whether Chapter 7 is the right path forward, an experienced bankruptcy attorney can help anticipate which debts will survive, estimate a realistic post-bankruptcy budget, and develop a strategy for handling non-dischargeable obligations before filing rather than after the case closes.

About Khan Law:

Khan Law is a Stockton-based law firm dedicated to Chapter 7 bankruptcy representation for individuals and families throughout the San Joaquin Valley. Led by attorney Alia Khan Abedelal, the firm guides clients through every stage of the bankruptcy process, from the initial consultation through discharge. For consultations, call (800) 419-8950.

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