Debtor D has filed for Chapter 7 bankruptcy. Which of the following debts is most likely to be discharged?

Answer options:

A student loan that has been due for 3 years.

Alimony payments owed to a former spouse.

A claim arising from a breach of contract judgment.

Income tax liability from a return due 1 year ago.

How to approach this question

Recall the list of non-dischargeable debts (WAFTED: Willful injury, Alimony, Fraud, Taxes (recent), Educational loans, Debts unlisted).

Full Answer

C.A claim arising from a breach of contract judgment.✓ Correct

Under the Bankruptcy Code, certain debts are non-dischargeable, including student loans (generally), domestic support obligations (alimony/child support), and recent taxes (due within 3 years). A judgment for breach of contract (or ordinary negligence) is a general unsecured debt that is dischargeable in Chapter 7.

Common mistakes

Thinking all court judgments are non-dischargeable (only fraud/willful injury judgments are non-dischargeable).

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