Debts Discharged in Chapter 13 Bankruptcy, But Not Chapter 7

Chapter 13 bankruptcy lets you wipe out debt you can't eliminate in Chapter 7. Learn more.

Debtors who file for Chapter 13 bankruptcy can eliminate a broader range of debt than people who file for Chapter 7. Read on to learn about obligations exclusively dischargeable in a Chapter 13 case.

Debts You Can Discharge in Chapter 13 Bankruptcy

Here are the most common types of debt you can eliminate in Chapter 13 but not in Chapter 7.

Debts Arising Out of Willfully and Maliciously Damaged Property

It likely won't surprise you that if you purposefully set out to damage another person’s property, you’ll be stuck paying for it in Chapter 7. You can’t discharge a debt resulting from “willfully or maliciously” damaging property owned by someone other than yourself.

That’s not the case in Chapter 13. If you owe someone money because you harmed their property, you can wipe out the obligation under Chapter 13. However, keep in mind that you can’t eliminate any debts arising out of your willful or malicious acts that cause personal injury or death in Chapter 7 or Chapter 13 bankruptcy.

Learn about the debts you can discharge in Chapter 7.

Chapter 13 Can Wipe Out Debt Incurred to Pay Your Tax Bill

Say you use your credit card to pay off a nondischargeable tax obligation, such as a recent income tax debt. You can discharge it in Chapter 13 bankruptcy but not in Chapter 7. Find out more about wiping out tax debt in Chapter 13.

Property Settlements Go Away in Chapter 13

Here's another surprising twist. If you owe money to your spouse, former spouse, or child as a result of a property settlement—usually an equalizing payment outlined in a divorce decree, marital settlement, or separation agreement—you can discharge it in Chapter 13 bankruptcy. However, domestic support obligations, such as alimony or child support, are not dischargeable in Chapter 7 or Chapter 13 bankruptcy.

Example. If a family court judge requires you to pay a joint credit card in your divorce decree, you have an obligation to your former spouse to pay off that debt. If you don’t pay off the card, the credit card company can sue your former spouse to collect the debt despite the divorce decree. If your spouse ends up paying the debt, he or she can come after you for reimbursement. In Chapter 7 bankruptcy, you can wipe out your liability to the credit card company for the joint debt – but not your obligation to your spouse under the divorce decree. But a Chapter 13 discharge wipes out your responsibility to your spouse as well as to the credit card company.

Find out more about support in bankruptcy.

Debts the Court Refused to Discharge in a Previous Bankruptcy

If you filed for bankruptcy previously and the court denied your discharge, you can’t eliminate those same debts in a subsequent Chapter 7 case. However, you might be able to discharge the debts from your prior bankruptcy in Chapter 13 bankruptcy. Find out what it means to file a “bad faith” bankruptcy.

Retirement Account Loans

Any money you borrow from your retirement plan is essentially a debt you owe to yourself. These debts are dischargeable in Chapter 13 bankruptcy but not in Chapter 7. However, if you continue to make your loan payments during bankruptcy, you can reduce your disposable income and the amount you must pay unsecured creditors through your repayment plan. Because of this, as a practical matter, it is typically in your best interest to continue your retirement loan payments in Chapter 13 bankruptcy. Find out about 401k plans in bankruptcy.

Post-Petition Homeowners or Condominium Association Fees

Unlike Chapter 7 bankruptcy, Chapter 13 bankruptcy allows you to discharge condominium or homeowners association (HOA) dues that are incurred after your filing date. But your HOA typically has a lien on your property for any outstanding fees despite your discharge. If you want to keep your house, you should continue paying all of your HOA fees.

Certain Fines and Penalties Owed to the Government

Chapter 7 bankruptcy doesn't eliminate most types of fines and penalties you owe to governmental entities. But fines and penalties payable to the government (other than criminal fines) are generally dischargeable in Chapter 13 bankruptcy.

More Information About Debts Discharged in Bankruptcy

This article covers particular debts. For more comprehensive information about wiping out debt in bankruptcy, see Which Debts are Discharged in Bankruptcy? Or try Which Debts Survive Bankruptcy?

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