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What Debts Can Be Discharged When Filing Bankruptcy?

Written by: Kristy Welsh

Last Updated: October 3, 2017

Filing for bankruptcy offers a fresh start when you find yourself overwhelmed by your debts. People may turn to bankruptcy for no fault of their own and for many different reasons. Maybe you lost your job or a family member suffered a sudden catastrophic illness, which used up your life savings and then some. Sometimes bad decisions and not being responsible with spending caused you to become burdened with too much debt. Bankruptcy offers people a way to begin their life over again.

What Does it Mean to Discharge Your Debts?

The main focus of bankruptcy is to discharge you from your debts. Discharge means that your personal liability for a debt ends, and creditors can't make any further collection efforts. However, not all debts are eligible for discharge as we shall see in the following paragraphs were we will show you what you can and can not discharge in a bankruptcy.

Debts That Can Be Discharged in a Bankruptcy

The following is a list of debts that can generally be discharged in a bankruptcy:

  • Credit card or unsecured loans
  • Medical bills
  • Payday loans
  • Collections
  • Judgments
  • Unpaid rent
  • Utility bills
  • Mortgages (but you will lose your home)
  • Auto loans or leases (but you will lose your car)
  • Individual tax debt including penalties, owed for more that three years after a tax return is filed

Chapter 7 Non-dischargeable Debts

In a Chapter 7 bankruptcy filing, the following debts cannot be discharged:

  • Taxes that have become due in the last three years 
  • Student loans
  • Alimony and child support
  • Debts obtained through fraud, false pretenses or false representation 
  • Debts you failed to schedule in time to allow creditors to file proofs of claim (unscheduled debts) 
  • Debts for fraud while you were acting in a fiduciary capacity, or for embezzlement or larceny 
  • Debts for willful and malicious injury 
  • Debts for fines or penalties to governmental units 
  • Debts for judgments in wrongful death or personal injury lawsuits resulting from motor vehicle, vessel or aircraft accidents while you were intoxicated 
  • Condominium or cooperative association fees or assessments 

Chapter 13 Non-dischargeable Debts

In a Chapter 13 bankruptcy filing, the following debts cannot be discharged:

  • Student loans
  • Alimony and child support
  • Fines and restitution
  • Unscheduled debts
  • Certain taxes, such as withholding taxes if you had employees, or taxes connected to fraudulent tax returns or tax evasion 
  • Debts incurred through fraud 
  • Debts for fraud while you were acting in a fiduciary capacity, or for embezzlement or larceny 
  • Debts for willful and malicious injury 
  • Judgments in wrongful death or personal injury cases arising from your intoxication 
  • Debts incurred after filing your case, which weren't included in your Chapter 13 plan 
  • Debts that are non-dischargeable under other laws, for example amounts owed for certain health education programs 
  • Interest owed on non-dischargeable debts 

Filing bankruptcy should not be taken lightly and before you even start the process, it is a good idea to talk to an experienced bankruptcy attorney. Sometimes, there are other options available to you other than filing for bankruptcy. Don't forget, a bankruptcy will stay on your credit for 7 to 10 years so make sure to exhaust any and all other options before going down the BK road.