When you’re overwhelmed by debt in Shreveport, Monroe, Alexandria, Lafayette, or Lake Charles and looking for a fresh financial start, personal bankruptcy in Louisiana can provide some much-needed relief. Not only do the creditor calls and debt collector lawsuits stop when you file with the Western District of Louisiana bankruptcy court, but you eliminate a lot of your financial burden.
You’ll notice that we said ‘a lot’ instead of ‘all.’ While bankruptcy can clear away credit card balances, medical debt, overdue utility bills, and certain other unsecured debts, it doesn’t eliminate everything. In Louisiana, obligations like child support, student loans, and some taxes typically remain. In this guide, we’ll outline what you need to know about dischargeable vs. non-dischargeable debts in Louisiana, so you can better plan for your future after bankruptcy.
At Simon Fitzgerald LLC, Louisiana’s oldest bankruptcy law firm, we’ve helped thousands of clients understand which debts can and cannot be discharged through bankruptcy. Our attorneys have deep expertise in both Chapter 7 and Chapter 13 filings across the Western District of Louisiana, ensuring you receive accurate guidance about your specific debt situation.
What Debts Are Dischargeable in Louisiana?
Some obligations can be fully discharged under Chapter 7, while others may require partial repayment through Chapter 13. Understanding which kinds of debt qualify for discharge can help you determine the best bankruptcy path for your situation.
With a Chapter 7 filing in Louisiana (also known as a liquidation bankruptcy), you can usually eliminate the following unsecured debts as well as any associated collection actions and wages. garnishments, although you may have to surrender non-exempt assets under Louisiana bankruptcy exemption laws:
- Credit Card Debt: Outstanding balances on credit card bills (including principal amounts, late fees, and penalty interest) are wiped out in a Chapter 7 bankruptcy proceeding. This exception applies to major credit cards, store cards, and gas cards.
- Medical Debt: Hospital bills, doctor’s office charges, surgery costs, and emergency room expenses can add up quickly, especially if insurance coverage is limited. Medical debt is one of the most common reasons people file for bankruptcy protection, and fortunately, Chapter 7 allows for full discharge of unpaid medical expenses. This category includes ambulance fees, dental bills, and even physical therapy costs.
- Personal Loans: Any unsecured personal loan (meaning it was not backed by collateral like a car or home) can be discharged. This classification includes loans from banks and credit unions, payday loans, and money borrowed from friends or family.
- Promissory Notes: A promissory note is a written agreement to repay a loan under specific terms. People often use them for personal loans, business investments, or private lending arrangements. If you signed a promissory note to borrow money but can’t repay it, Chapter 7 bankruptcy can eliminate your legal obligation to pay.
- Utility Bills: Unpaid electric, gas, water, sewer, and phone bills can be discharged in Chapter 7 bankruptcy. However, utility providers have the right to disconnect service if bills remain unpaid after filing. If you want to keep your services running, you may need to pay a security deposit or arrange a new payment plan. Additionally, if you’re behind on cable, internet, or cell phone bills, those consumer debts can also be discharged, but the service provider may terminate your contract.
- Certain Lease and Contract Obligations: If you owe money due to breaking a lease or failing to fulfill a contractual obligation, this type of bankruptcy can often erase that debt. This scenario applies to apartment or rental home leases, equipment or service contracts, and sole proprietorship debts.
Debts that may require Chapter 13 repayment (also known as reorganization bankruptcy) over a period of time include:
- Court Fees and Fines: Certain legal fees must be repaid, though some government-imposed debts may be negotiable.
- Non-Dischargeable Tax Debt: Older income tax debts might qualify for discharge, but many recent tax debts must be repaid.
- Co-Op or HOA Fees: If you own property governed by a homeowners’ association (HOA) or co-op, unpaid fees may need to be repaid under a structured plan.
- Retirement Plan Loans: Money borrowed from 401(k) plans or pensions must typically be repaid, as bankruptcy protection does not cancel these personal obligations.
Choosing the right bankruptcy chapter depends on the types of debt you have. An experienced Louisiana bankruptcy lawyer at Simon Fitzgerald LLC can help you determine the best option for your financial situation.
Not Sure Which of Your Debts Can Be Discharged? Our experienced bankruptcy attorneys can review your specific debt situation and explain which obligations can be eliminated. Schedule a free consultation today by calling our nearest office:
- Shreveport: 318-868-2600
- Monroe (served by Shreveport Office):
- Alexandria: 318-625-7505
- Lafayette: 337-984-1584
- Lake Charles (served by Lafayette Office): 337-984-1584
Or use our online calendar to book an appointment at any of our Louisiana locations.
Non-Dischargeable Debts
While bankruptcy can erase many financial burdens, some debts cannot be discharged. These typically fall into three categories:
- Debts that federal law prohibits from bankruptcy discharge;
- Debts that creditors successfully challenge, and
- Student loans, which require a separate legal process.
Understanding these limitations helps prevent surprises and ensures you know what to expect.
Debts That Are Automatically Non-Dischargeable
Certain debts are considered too important to erase and remain your responsibility even after bankruptcy. They include:
- Child Support and Alimony: Court-ordered child support and spousal support (alimony) payments cannot be eliminated through bankruptcy proceedings. If you’re behind on domestic support obligations, filing for Chapter 7 won’t erase what you owe. However, Chapter 13 may allow you to restructure payments over time.
- Most Taxes: While some older income tax debts may qualify for discharge under specific conditions, most tax obligations (including recent federal and state taxes, payroll taxes, and tax liens) are non-dischargeable.
- Government Fines and Penalties: One cannot erase debts owed to government agencies, including court fines, criminal restitution, and penalties for breaking laws. This distinct category includesfines for traffic violations, environmental penalties, and regulatory fines.
- Debts from Drunk Driving Injuries or Death: If you were found liable for causing personal injury or death due to intoxicated driving, any financial obligations, such as lawsuit judgments, settlements, or restitution, cannot be discharged in bankruptcy.
Debts That Creditors Can Challenge
Some eligible debts are not automatically non-dischargeable, but creditors can object to their discharge by proving they were obtained through fraud, misconduct, or false pretenses. If a creditor successfully challenges a debt, the bankruptcy judge may decide that you must still pay it. Common examples include:
- Large Purchases Right Before Filing: If you made luxury purchases (such as expensive electronics, vacations, or jewelry) within 90 days of filing for bankruptcy, creditors may argue that you never intended to repay them. Courts often deny discharge for these consumer debts, considering them bankruptcy fraud.
- Debts Not Listed in Your Bankruptcy Petition: If you fail to include a debt in your bankruptcy filing, it won’t be discharged unless the creditor was properly notified. This is why it’s crucial to ensure all debts are listed or collection efforts will continue.
- Breach of Fiduciary Duty, Embezzlement, or Larceny: If you were responsible for managing someone else’s money and misused or stole funds, those debts cannot be discharged. Courts take financial fraud cases seriously, and bankruptcy will not erase obligations tied to embezzlement, misappropriation, or breach of fiduciary capacity.
Student Loan Debt: A Special Case
Student loan debt is one of the most difficult debts to discharge in Louisiana bankruptcy courts. Unlike other financial obligations, federal and private student loans require a separate legal process called an adversary proceeding, where you must prove “undue hardship” to qualify for debt discharge. This higher standard makes student loan discharge rare but not impossible with skilled legal representation. Courts use different legal tests to assess this standard, including:
- The Brunner Test: This test requires you to show that repaying the loan would cause extreme financial hardship, that your hardship is likely to continue, and that you’ve made a good-faith effort to repay the loan.
- The Totality of Circumstances Test: With this test, the court evaluates your income, expenses, and overall financial situation to determine if repaying the loan is unrealistic.
Because the burden of proof is high, most student loan debts remain non-dischargeable unless the borrower can present strong, compelling evidence of financial distress.
While bankruptcy provides powerful relief for many types of unsecured and secured debt, understanding what cannot be discharged helps you plan ahead. If you have non-dischargeable debts, a bankruptcy attorney can help you explore alternative options, such as restructuring debt payments through Chapter 13 or negotiating settlements with creditors.
Client Success Story
“Mr. Levy’s staff was very professional and was very knowledgeable of the questions of my concerns. They gave me options that were in my budget and were there every step of the way. Although this was a route I didn’t want to take, they made me feel comfortable in knowing that this is not the end. I have recently been discharged and Mr. Levy called to congratulate me on my Fresh Start. That meant a whole lot to me. If you are in need of a great bankruptcy attorney, Simon Fitzgerald LLC is the perfect place to go.” — Renarda Clay-Allen
Free Resource: Louisiana Bankruptcy Debt Discharge Guide
Wondering which of your specific debts can be eliminated through bankruptcy? Download our free Louisiana Bankruptcy Debt Discharge Guide to learn:
- Complete list of dischargeable and non-dischargeable debts
- Special circumstances where typically non-dischargeable debts might qualify
- How Chapter 7 and Chapter 13 treat different types of debt
- Post-bankruptcy strategies for managing remaining obligations
Know What Bankruptcy Can and Can’t Do
Bankruptcy can set you on the path to financial freedom, but it doesn’t erase all debts. While Chapter 7 can eliminate credit card debt, medical bills, and personal loans, certain debts (like child support, most taxes, and student loans) remain your responsibility. If creditors challenge a debt or if you recently made large purchases, some obligations may also survive the bankruptcy process.
If you’re considering bankruptcy in Shreveport, Monroe, Alexandria, Lafayette, or Lake Charles, having an experienced Louisiana bankruptcy attorney by your side is critical. At Simon Fitzgerald LLC, we focus exclusively on bankruptcy law for the Western District of Louisiana and can guide you through every step of the process, from determining which debts can be discharged to representing you at your 341 meeting of creditors. If you need to discharge debts through Chapter 7, create a manageable repayment plan with Chapter 13, or explore alternatives to bankruptcy, we’ll help you find the best path forward. Call us or fill out our online form to speak with a Louisiana bankruptcy lawyer who understands your situation and is ready to help.
