One of the most fundamental questions in any bankruptcy case is: which of my debts will actually go away? In Chapter 7 bankruptcy, the goal is a discharge — a court order that permanently eliminates your personal liability for covered debts. But not all debts are dischargeable. Understanding which debts can be eliminated and which will survive bankruptcy is essential to making an informed decision about whether Chapter 7 is the right path for you.
What "Discharge" Means
When a debt is discharged, the creditor can no longer legally collect it from you personally. They cannot call you, sue you, garnish your wages, or take any other collection action for that debt. You are no longer legally obligated to pay it. If the debt was secured (like a car loan or mortgage), the lien on the collateral generally survives discharge — meaning the creditor can still repossess or foreclose — but your personal liability for the debt is eliminated.
Debts That Are Typically Dischargeable
The following types of debts are generally dischargeable in Chapter 7:
- Credit card debt: Balances owed to Visa, Mastercard, department stores, and other credit card issuers are typically discharged in full.
- Medical bills: Hospital bills, doctor bills, ambulance bills, and other medical debt are dischargeable unsecured debts.
- Personal loans: Unsecured personal loans from banks, credit unions, or individuals are generally dischargeable.
- Utility arrears: Past-due balances owed to electric, gas, and water companies can be discharged.
- Lease obligations: If a lease is rejected in bankruptcy, the resulting damage claim is generally dischargeable.
- Civil court judgments: Money judgments against you in civil cases (other than those resulting from fraud or intentional misconduct) are generally dischargeable.
- Certain tax debts: Income taxes more than three years old, for which a return was filed more than two years before bankruptcy and which were assessed more than 240 days before filing, may be dischargeable. Tax debts are complex — always consult an attorney.
Debts That Are Not Dischargeable
Section 523 of the Bankruptcy Code lists debts that cannot be discharged in Chapter 7. These include:
Child Support and Alimony
Domestic support obligations — child support and spousal support — are absolutely non-dischargeable. Bankruptcy does not reduce, modify, or eliminate these obligations.
Student Loans
Student loans are presumptively non-dischargeable unless the debtor can prove "undue hardship" — a standard that courts apply very stringently. In practice, very few borrowers successfully discharge student loans in bankruptcy. Some courts have become slightly more flexible in recent years, particularly for elderly or permanently disabled borrowers, but student loan discharge remains the exception rather than the rule.
Most Tax Debts
Recent income taxes are not dischargeable. Payroll taxes, trust fund taxes, and taxes assessed due to fraud are never dischargeable. The rules for tax dischargeability are complex, and a careful analysis of your specific tax situation is important.
Debts Arising from Fraud or Dishonesty
Debts obtained through fraud — such as false representations on a credit application, or running up credit card charges while insolvent with no intention to pay — are non-dischargeable. A creditor must file a complaint in the bankruptcy case to challenge the dischargeability of a debt on fraud grounds, and must do so within a specific time period.
Debts from Willful and Malicious Injury
Debts arising from intentional wrongdoing — assault, battery, conversion of property, and similar intentional torts — cannot be discharged.
Criminal Fines and Restitution
Criminal restitution orders and fines payable to government entities survive bankruptcy.
DUI-Related Debts
Debts arising from death or personal injury caused by the debtor's operation of a vehicle while intoxicated are non-dischargeable.
Secured Debts: A Special Case
Chapter 7 discharges your personal liability on a secured debt, but does not eliminate the creditor's lien on the collateral. This means:
- If you want to keep your car and it has a loan against it, you generally must reaffirm the debt (enter into a new agreement to remain liable) or redeem the vehicle by paying the secured creditor the current value of the car in a lump sum.
- If you want to keep your house and you are current on your mortgage, you continue making payments. Chapter 7 does not eliminate your mortgage obligation if you want to remain in the home.
- If you choose not to reaffirm a secured debt, the creditor can repossess or foreclose, but cannot collect the deficiency balance from you personally after discharge.
Why the Analysis Matters Before You File
If most of your debt consists of non-dischargeable obligations — such as substantial student loans, tax debts, or child support arrears — Chapter 7 may not provide the relief you expect. Understanding exactly which of your debts will be eliminated before you file allows you to make a genuinely informed decision. An attorney can walk through your specific debts, flag any that may pose dischargeability issues, and help you evaluate whether Chapter 7, Chapter 13, or another approach best addresses your situation.