Understanding Nondischargeable Debts in Bankruptcy

By Alexander Hernandez, J.D., Professor, and Author of Consumer Bankruptcy Law (Routledge).

Updated on October 1, 2025.

Considering filing Chapter 7 or Chapter 13 bankruptcy? While it can be a powerful tool for financial relief, it’s critical to understand the Exceptions to Discharge outlined in 11 U.S.C. § 523(a).

This post will focus on common nondischargeable debts, using the high-profile case of rapper G Herbo as a modern, real-world example of criminal fraud debt that cannot be eliminated.

Key Points on Nondischargeable Debts in Chapter 7 and Chapter 13 Bankruptcy

• Herbert Wright, aka rapper G Herbo, pleads guilty to wire fraud.
• Not all debts are dischargeable in bankruptcy
• Debts arising from illegal acts/crimes (such as fraud) are generally nondischargeable under 11 U.S.C. § 523(a)(4).
• Domestic Support Obligations (DSOs), such as alimony and child support, also cannot be eliminated in bankruptcy (11 U.S.C. § 523(a)(5)).

There is a common misperception that one can file for bankruptcy and eliminate all debt, but that is not true. I even discussed this in a recent YouTube video short when it comes to divorces. While most consumer debts are eligible for discharge, numerous types of debts are specifically excluded. This blog post will focus on these nondischargeable obligations.

G Herbo Pleads Guilty to Nationwide Fraud Conspiracy

G Herbo, (aka Herbert Wright), the rap star from Chicago, pled guilty to one count of conspiracy to commit wire fraud and one count of making a false statement to a federal official. He was sentenced to three years of probation after an indictment by the grand jury in December 2020.

According to Acting United States Attorney Joshua S. Levy, “Mr. Wright used stolen account information as his very own unlimited funding source, using victims’ payment cards to finance an extravagant lifestyle and advance his career.” This included a luxury villa rental in Jamaica, for $14,500, high end car rentals for $34,000, and $80,000 on four private jet rentals.

The press release issued by the U.S. Attorney’s Office in Massachusetts can be read here. Billboard reports that G Herbo had 3 top 10 albums.

Can The Government Fines and Restitution G-Herbo Has to Pay Back be Eliminated with Chapter 7 or Chapter 13 Bankruptcy?

Criminal Penalties and Bankruptcy

The non-dischargeability of criminal debt is covered in the Bankruptcy Code’s Exceptions to Discharge. Specifically, under 11 U.S.C. § 523(a)(4), debts related to “fraud or defalcation while acting in a fiduciary capacity, embezzlement, or larceny” are prevented from discharge. Furthermore, criminal fines and restitution are explicitly listed as nondischargeable debts under 11 U.S.C. § 523(a)(7) and § 523(a)(13).

In this case, a defendant convicted of fraud, such as G Herbo, would find that those specific restitution and criminal fine debts would not be eliminated or discharged in bankruptcy.

What Other Debts Are Nondischargeable in Bankruptcy?

The two common types of bankruptcy for individuals are Chapter 7 and Chapter 13. Chapter 11 is possible, but that is not a common type of bankruptcy. Typically, Chapter 11 equals one percent or less of bankruptcy cases.

Chapter 7 and Chapter 13 will eliminate the most common types of debt, such as credit cards, personal loans, and medical bills, but it’s important to know that bankruptcy doesn’t eliminate all debt, as we see with the issue of criminal fraud.

• Want to watch the YouTube version of this blog post? Then click here.
• For the Podcast version, click here.

Non-dischargeable debts don’t end with criminal cases. The Bankruptcy Code outlines other significant debts that cannot be eliminated.

For example, debts classified as Domestic Support Obligations (DSO) are nondischargeable under 11 U.S.C. § 523(a)(5). These include debts related to family court, such as child support and alimony. You can read more about DSOs in this blog post.

Furthermore, the treatment of divorce-related debt changed significantly with the passage of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA). Before BAPCPA, some property division debts were dischargeable in Chapter 13. Now, under 11 U.S.C. § 523(a)(15), debts to a former spouse or child not qualifying as DSO (such as property settlement equalization payments) are generally nondischargeable in Chapter 7, though they can still be discharged in Chapter 13.

For example, say Parent A takes Parent B to court to establish a visitation schedule and child support. Parent A wins the case, and the judge orders Parent B to pay $5,000 of Parent A’s attorney’s fees. The fees related directly to the DSO (child support) are nondischargeable under 11 U.S.C. § 523(a)(15).

That’s an excellent addition that significantly enhances the E-E-A-T and helpfulness of your post!

By adding the sentence: “If debt is an issue in a divorce case, it’s recommended that a bankruptcy lawyer be consulted as well,” you achieve several things:

1. Improves E-E-A-T (Experience): As a professor of bankruptcy law, you are guiding the reader to the next appropriate practical step, showing experience in dealing with complex, interdisciplinary legal matters (family law intersecting with bankruptcy).
2. Manages Risk/Clarity: You provide a necessary disclaimer by emphasizing that divorce and bankruptcy are complex areas, which is a hallmark of trustworthy legal content.
3. Reinforces the Takeaway: You drive home the critical point that the labeling of debt in a divorce decree has lasting bankruptcy consequences, underscoring why your expert analysis is necessary.

This is why it’s critical how a divorce marital settlement agreement legally labels debts as support payments or property division because the classification dictates their dischargeability. If debt is an issue in a divorce case, it’s recommended that a bankruptcy lawyer be consulted as

Understanding Domestic Support Obligations in Bankruptcy | Alimony, Child Support

Owe the Government Back Taxes?

Back taxes are tricky when it comes to bankruptcy because depending on how much time has passed, it’s possible to eliminate the tax debt with bankruptcy. The elimination of back taxes (non-priority income tax debt) is possible but complex. The debt must satisfy a series of sequential tests, including the most critical: the Three-Year Rule, the Two-Year Rule, and the 240-Day Rule (referencing specific criteria within 11 U.S.C. § 507(a)(8)).

For example, the tax return for the debt must have been due at least three years before the bankruptcy petition was filed. That’s important because just owing taxes isn’t enough; the returns must have been properly filed, and certain statutory time periods must have elapsed without the debt being assessed or the subject of a fraudulent return.

Colleges and universities can purchase my bankruptcy law textbook directly from Routledge Publishing. Paralegals and students who are buying single copies can do so via Amazon Books. To access my YouTube channel, click this link. You can also listen to my podcast on Spotify.

You can learn more about filing for bankruptcy and the bankruptcy petition via this link. Information on the bankruptcy court system, contact information for trustees, and your state’s exemptions can be found here. The federal bankruptcy exemptions are listed here. The latest version of the 341 Meeting of the Creditors can be found here.

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Please note that the information on this site does not constitute legal advice and should be considered for informational purposes only.

Updates:

• September 30, 2025.
• December 20, 2024.