11 U.S.C. 523 lists the debts that survive bankruptcy even after a discharge: most recent taxes, student loans (absent an undue-hardship finding), domestic support, debts from fraud or willful injury, and most government fines. Some 523 debts, like fraud, require the creditor to file an adversary proceeding to keep them alive; others, like support and most taxes, are nondischargeable automatically.
The General Rule
The bankruptcy discharge under § 727 (Chapter 7) or § 1328 (Chapter 13) releases the debtor from personal liability on most pre-petition debts. 11 U.S.C. § 523 carves out specific categories that are not discharged. These exceptions reflect a mix of public-policy judgments — some debts are too important to society to be wiped out, others reflect debtor misconduct that should not be rewarded.
The list below is selective — § 523(a) has 19 enumerated categories. The most consequential for typical consumer debtors are described here.
Tax Debts
Section 523(a)(1) excepts most tax debts from discharge. Income taxes have a narrow dischargeability window when all of the following are met (the so-called "3-2-240" rule):
- The tax return was due (with extensions) more than 3 years before the petition date
- The return was actually filed at least 2 years before the petition date
- The tax was assessed at least 240 days before the petition date
- No fraudulent return or willful tax evasion is involved
Tax debts not meeting all four conditions survive the discharge. Trust-fund taxes (employment-tax withholding the debtor was required to collect) are non-dischargeable regardless of timing.
Student Loans
Section 523(a)(8) excepts educational loans from discharge unless the debtor demonstrates "undue hardship" through a separate adversary proceeding. The undue-hardship test in most circuits follows Brunner v. New York State Higher Education Services Corp., 831 F.2d 395 (2d Cir. 1987), requiring:
- The debtor cannot maintain a minimal standard of living for self and dependents based on current income while paying the loan
- Additional circumstances suggest this state of affairs is likely to persist for a significant portion of the repayment period
- The debtor has made good-faith efforts to repay
The 9th Circuit applies a similar but distinct "totality of circumstances" test. Either way, undue-hardship discharge of student loans is difficult and uncommon, though recent DOJ guidance has somewhat eased the path for federal student loan borrowers.
Domestic Support Obligations
Section 523(a)(5) excepts domestic-support obligations — child support, alimony (in the nature of support), and similar court-ordered obligations — from discharge entirely. These are also priority claims under § 507(a)(1) and must be paid in full through any Chapter 13 plan.
Property-settlement obligations from divorce are treated separately under § 523(a)(15) and are non-dischargeable in Chapter 7 but were historically dischargeable in Chapter 13. The 2005 BAPCPA amendments narrowed the Chapter 13 super-discharge such that many property-settlement obligations are now also non-dischargeable in Chapter 13.
Fraud and Defalcation
Section 523(a)(2) excepts debts for money, property, or services obtained by:
- False pretenses, false representation, or actual fraud (other than a statement respecting financial condition)
- A materially false written statement respecting financial condition (with reasonable reliance and intent to deceive)
This category requires an adversary proceeding by the creditor. The creditor must file a complaint within 60 days after the first date set for the meeting of creditors (FRBP 4007(c)) and prove the elements of fraud by a preponderance of the evidence.
Common § 523(a)(2) cases involve credit-card fraud (cash advances or luxury purchases shortly before filing) and false financial statements made to obtain loans.
Embezzlement, Larceny, Fiduciary Defalcation
Section 523(a)(4) excepts debts arising from fraud or defalcation while acting in a fiduciary capacity, embezzlement, or larceny. Like § 523(a)(2), these require adversary proceedings filed within the 60-day window.
Willful and Malicious Injury
Section 523(a)(6) excepts debts for willful and malicious injury by the debtor to another entity or to the property of another. The Supreme Court in Kawaauhau v. Geiger, 523 U.S. 57 (1998), held that "willful" requires a deliberate or intentional injury, not merely a deliberate or intentional act that causes injury. Negligent or reckless injuries do not meet the standard.
Common applications include intentional torts (assault, battery), intentional property damage, and certain breach-of-contract claims with willful elements.
Death or Personal Injury from DUI
Section 523(a)(9) excepts debts for death or personal injury caused by the debtor's operation of a motor vehicle, vessel, or aircraft while intoxicated by alcohol, a drug, or any other substance. This category does not require an adversary proceeding — the criminal record or civil judgment is typically sufficient evidence.
Restitution and Criminal Fines
Section 523(a)(7) excepts fines, penalties, and forfeitures payable to a governmental unit. Section 523(a)(13) excepts criminal restitution orders. These survive discharge regardless of the debtor's ability to pay.
Debts Not Listed in the Bankruptcy Schedules
Section 523(a)(3) excepts debts not listed in the schedules where the creditor lacks notice or actual knowledge of the case in time to file a timely claim. The exception applies primarily in cases where assets are available for distribution; in no-asset cases, courts often reopen the case to add the missed creditor or treat the omission as inconsequential.
Practical note. Always list every known creditor on the bankruptcy schedules, even debts the debtor disputes. Missing a creditor risks § 523(a)(3) non-dischargeability, particularly in asset cases.
The Adversary Proceeding Mechanism
For categories that require creditor action (§ 523(a)(2), (4), (6), (15)), the creditor must file an adversary complaint under FRBP 7001 within 60 days after the first date set for the § 341 meeting of creditors. The complaint initiates a separate civil action within the bankruptcy case. The court adjudicates whether the debt falls within the exception and enters a judgment determining dischargeability.
Failure to file timely results in the debt being discharged. Courts construe the deadline strictly; extensions are rarely granted absent extraordinary circumstances.
Categories Self-Executing vs. Adversary-Required
Some § 523(a) categories are "self-executing" — the debt is non-dischargeable as a matter of law without need for adversary action (taxes, domestic support, student loans, criminal fines). Others require the creditor to file an adversary proceeding to establish non-dischargeability (fraud, embezzlement, willful and malicious injury, property settlement).
The distinction matters: self-executing exceptions persist past the bankruptcy without action by anyone; adversary-required exceptions are forfeited if the creditor does not file timely.
Further Reading
- 11 U.S.C. § 523 — Exceptions to Discharge
- Brunner v. NY State Higher Ed. Servs. Corp., 831 F.2d 395 (2d Cir. 1987)
- Kawaauhau v. Geiger, 523 U.S. 57 (1998)
- Does Bankruptcy Clear All Debt?
- Does Bankruptcy Clear Student Loans?
- Can You File Bankruptcy on Taxes?
This page provides educational information only. Dischargeability questions are debt-specific and procedurally complex. Consult a licensed bankruptcy attorney about your specific situation.