Filing for bankruptcy can get you out from under debt and give you a fresh start. In both Chapter 7 or Chapter 13 bankruptcy, many types of debt will be discharged (wiped out) at the end of your case. This isn't true of all debts, however.
If you have nondischargeable debt and you file for Chapter 7, you'll still owe these debts after your discharge. If you file for Chapter 13 bankruptcy, you'll repay most nondischargeable debts in full through your repayment plan.
Debts Discharged in Chapter 7 and Chapter 13 Bankruptcy
credit card debt
lawsuit judgments against you (but associated liens might not be wiped out)
most debts arising from car accidents
obligations under leases and contracts
promissory notes, and
any other debt that doesn't fit into one of the nondischargeable categories explained below.
Debts Discharged in Chapter 13 Bankruptcy Only
marital debts arising out of a divorce or settlement agreement (other than debts for support)
debt incurred to pay a nondischargeable tax debt
condo, coop, and HOA fees
debts for loans from a retirement plan, and
debts that couldn't be discharged in a previous bankruptcy.
Nondischargeable Debt: What Debts Are Not Discharged in Bankruptcy?
There are three categories of debts that won't be discharged in your bankruptcy case:
some debts are never discharged
some aren't discharged unless you can successfully argue that they should be, and
some are not discharged only if a creditor successfully argues that they should not be.
Debts That Are Never Discharged
You'll continue to owe these debts after your Chapter 7 bankruptcy case is over, and you'll pay these debts in full in your Chapter 13 plan:
child support and alimony
fines, penalties, and restitution you owe for breaking the law
certain tax debts, and
debts arising out of someone's death or injury as a result of your intoxicated driving.
If you file under Chapter 7, you'll also continue to owe condo, coop, and HOA fees; debts for loans from a retirement plan; and debts you couldn't discharge under a previous bankruptcy.
Debts That Aren't Discharged Unless You Meet Legal Exception
You must ask the court to discharge certain debts. For instance, you must convince the court that you won't be able to repay student loan debt.
Other debts won't be discharged unless you meet legal requirements. For instance, discharging income taxes won't happen unless a particular amount of time has elapsed and other requirements are met.
Debts Discharged Unless a Creditor Successfully Objects
Some debts get wiped out unless a creditor convinces the court that you should remain obligated to repay the debt. These debts include:
debts arising from actual fraud
debts for luxuries of more than $725 purchased within 90 days of filing or cash advances of more than $1,000 taken within 70 days of filing (figures are current for cases filed between April 1, 2019, and March 31, 2022)
debts arising from willful and malicious acts
debts arising from embezzlement, larceny, or breach of fiduciary duty, and
debts or creditors you don't list on your bankruptcy papers.
Getting Legal Help From a Local Bankruptcy Attorney
If a significant portion of your debt load consists of debts that might not be discharged, you'll want to talk to an experienced bankruptcy lawyer. A lawyer can review your situation and let you know the likely outcome.
Take our bankruptcy quiz to identify potential issues and learn how to best proceed with your bankruptcy case.