Bankruptcy reaches a number of important social goals, such as providing people with financial relief when they are overwhelmed by problems over which they have no control. It also makes a better environment for entrepreneurs, because without the safety net of bankruptcy relief, individuals and companies would be less willing to take financial risks. Bankruptcy does not eliminate all debt. A number of other debts are given special status, and are not discharged. Some of the categories which are not discharged are debts for fraud, certain taxes and spousal and child support.
Examples are fraud debt and obligations for wilful and malicious injuries.
Some other debts are excepted from discharge whether the creditor takes action or not, such as child support and certain taxes. A personal Chapter 7 will discharge unsecured debt, but such a discharge cannot be granted more often than once every six years. Also, if a debtor has sufficient income to pay a significant portion of his debt, he may be prevented from proceeding with a Chapter 7 bankruptcy. Two other common types of bankruptcy are Chapter 13 and Chapter 11. Both of these types of bankruptcies are designed for the debtor to make repayments of debt.