Debts That Are Discharged in Chapter 7 Bankruptcy

Chapter 7 bankruptcy wipes out most unsecured debt, like medical bills, utility bills, back rent, personal loans, some government benefit overpayments, and credit card charges, so you're no longer on the hook for it. It'll also discharge secured debts, such as a mortgage or car loan, but you'll have to give up the property tied to that debt if you want the debt itself erased.

Some debts stick around no matter what, including domestic support obligations, most student loans, and certain taxes. Here's more about the debts that survive bankruptcy, along with what actually gets discharged, what doesn't, and what happens to secured property along the way.

"Nondischargeable Debts" You Can't Wipe Out in Chapter 7 Bankruptcy

Some debts survive Chapter 7 no matter how badly you want them gone, including student loans, taxes, domestic support obligations, and debts tied to fraud, luxury purchases, lawsuit judgments, or criminal conduct. Here's a closer look at each, and why the law treats them differently.

Student Loans

You'll remain responsible for paying a student loan unless you can show that repaying it would impose an "undue hardship." Courts in most parts of the country apply a three-part test to decide this: you must show that you can't maintain a minimal standard of living if forced to repay the loan, that this financial hardship is likely to continue for most of the repayment period, and that you've made a good-faith effort to repay the loan before filing bankruptcy. Meeting this standard requires filing a separate lawsuit within your bankruptcy case, called an adversary proceeding. It isn't automatic. (11 U.S.C. § 523(a)(8).)

Certain Tax Debts

Income taxes may be discharged if:

• the tax return was filed more than two years before you filed your bankruptcy petition
• there was no fraud or tax evasion involved
• the taxes were first due at least three years before the bankruptcy petition was filed, and
• the tax liability was assessed more than 240 days before you filed for bankruptcy.

(11 U.S.C. § 523(a)(1).)

Domestic Support Obligations

Child support and alimony (also called spousal support or maintenance) are never dischargeable in Chapter 7 bankruptcy. This holds whether you owe the debt directly to your spouse, former spouse, or child, or to a state agency that's taken over collection on their behalf. Filing for bankruptcy won't pause your obligation to keep making these payments, and domestic support debt also gets "priority" status, meaning it's paid before most other debts if the trustee has any money to distribute to creditors. Learn more about how bankruptcy affects child support obligations. (11 U.S.C. § 523(a)(5).)

Lawsuit Judgments

Money judgments are dischargeable, with a few exceptions. Still, filing for bankruptcy before getting a lawsuit judgment is usually a good idea. Why? A money judgment allows a creditor to put a lien against your real estate and personal property, and many liens don’t go away in a bankruptcy case (although releasing liens in bankruptcy is possible).

The creditor won’t be able to force you to make payments on the debt, but can take steps to acquire and sell the encumbered property (the property the lien is attached to). Some creditors don't mind waiting for you to sell the property and taking what is owed out of the proceeds. If you wait years to sell, the interest can build up to the point that the amount owed doubles, triples, or more.

Debt Incurred Through Fraud or False Pretenses

Money, property, or services obtained under fraud or false pretenses aren’t dischargeable. Fraud can be as simple as purchasing items on credit without intending to repay the debt. A false pretense can be a misrepresentation to a creditor to obtain credit. For instance, overstating your income on a loan application to reach the minimum to qualify for the loan would likely fall within the false pretenses doctrine. (11 U.S.C. § 523(a)(2)(A).)

If you’re concerned about fraud, you should be especially wary of filing for bankruptcy. The ramifications can range from being denied discharge of a single debt to the entire case, to fines and prison time. If you're concerned about this, a bankruptcy lawyer can explain when a creditor might file an objection to your bankruptcy case.

Luxury Purchases or Cash Advances Obtained Soon Before Filing for Bankruptcy

Certain debts incurred shortly before filing bankruptcy are presumed nondischargeable. Because most people can’t afford to pay their bills for a period before filing, the timing suggests you never intended to repay them. Here are the rules:

• Debts incurred within 90 days of your bankruptcy filing for luxury goods or services for $900 or more owed to a single creditor are presumed nondischargeable.
• Cash advances of $1,250 or more taken within 70 days of your filing are presumed nondischargeable. (11 U.S.C. § 523(a)(2)(C); amounts current between April 1, 2025, and March 31, 2028.)

If the creditor objects to the charge, you must prove the purchase was reasonable given the circumstances. In this situation, many debtors choose to settle with the creditor and pay the charge, given the high cost of litigation. Learn more about using credit cards before filing for bankruptcy.

Criminal Fines, Restitution, and DUI-Related Debts

Fines, penalties, and forfeitures owed to a government unit, such as traffic tickets and criminal fines, survive Chapter 7 bankruptcy. Criminal restitution gets the same treatment, even when it's payable to a private victim rather than the state, because the debt arises from your criminal sentence rather than an ordinary civil claim.

Likewise, if you injured or killed someone while driving under the influence of drugs or alcohol, the resulting debt is nondischargeable, whether it's reduced to a civil judgment or imposed as part of a criminal case. (11 U.S.C. § 523(a)(7), (a)(9).)

When You Can Discharge Secured Debts in Chapter 7 Bankruptcy

You can always discharge any secured debt, but you won't be able to keep the property serving as collateral, such as your house or car. Because the attached lien won’t go away in bankruptcy, the creditor can still take the property if the debt remains unpaid. For instance, you can discharge a mortgage or car loan, but you’ll need to give up the house or vehicle.

If you don't want or need the secured property, letting the creditor take it back can be advantageous. When you complete your bankruptcy paperwork, you’ll indicate your intent to surrender the property. You don't have to deliver the property to the creditor, but you must cooperate with the creditor’s repossession. Sometimes creditors won’t bother to repossess small items because it’s not worth the expense of picking them up.

If, however, the creditor failed to take a security interest in the property, you might be able to keep the property. For example, if a car dealer forgot to place a lien on your car, and its value is within the motor-vehicle exemption, the dealer's claim would be unsecured, and you could keep the car as exempt property.

Don’t count on this, though. It’s rare, and you’d need to protect the entire car value with a bankruptcy exemption. Otherwise, the Chapter 7 trustee appointed to your case will sell the car, return your exemption amount to you, and use the remaining funds to repay creditors. Learn more about keeping a car in Chapter 7 bankruptcy.

What Is an Unsecured Debt in Chapter 7 Bankruptcy?

Unsecured debt is an obligation that isn’t backed by collateral. For instance, the debt is unsecured if, when you entered the credit contract, you didn’t agree that the creditor could take the property purchased on credit if you didn't comply with the contract terms.

By contrast, if you have a mortgage or car payment, you likely agreed that the creditor could take your house or car if you failed to make the payment, sell it, and use the proceeds to pay the note. This type of debt is secured because the debt is backed by collateral.

Need More Info?

Chapter 7 wipes out most debt, but exceptions like support, taxes, and recently incurred debt can catch filers off guard. Confirm how your specific debts are classified before you file. Go to AllLaw's Topic page for more easy-to-understand bankruptcy articles, or consider buying a self-help book like The New Bankruptcy by Attorney Cara O'Neill.