What Debts Are Discharged in Bankruptcy? Every Type Explained

You owe $43,000 across seven creditors and have no idea what bankruptcy will actually erase. The short answer: most of it. The long answer matters more.

Bankruptcy wipes out roughly 85-95% of consumer debt in Chapter 7 cases. But the remaining 5-15%—the stuff that survives,can make or break your fresh start. You need to know which debts disappear, which ones stick, and what you can do about the ones that refuse to leave.

Dischargeable Debt: What Bankruptcy Erases

These are the debts that bankruptcy was designed to eliminate. Once your case closes and you receive your discharge order, these obligations legally cease to exist. Creditors cannot call, sue, garnish, or collect. The debt is gone.

Credit Card Debt

Credit cards are the poster child for dischargeable debt. Whether you owe $800 or $80,000 across Visa, Mastercard, Discover, or store cards, bankruptcy erases it all. The caveat: if you racked up $1,000+ in luxury goods or cash advances within 90 days before filing, the creditor might challenge that portion. But the vast majority of credit card debt,including old charges, high balances, and maxed-out cards,vanishes.

Medical Bills

Hospital bills, ER visits, ambulance rides, surgery costs, prescription debt,all dischargeable. It does not matter if the bill is from last week or five years ago. It does not matter if you agreed to a payment plan with the hospital. Once discharged, the debt is gone and the hospital cannot pursue you.

One exception: if you signed a personal loan or used a credit card specifically to pay medical debt, that now counts as general unsecured debt and is still dischargeable. But if a medical provider put a lien on your home, that lien survives bankruptcy unless you negotiate its removal.

Personal Loans and Payday Loans

Unsecured personal loans from banks, credit unions, or online lenders are fully dischargeable. So are payday loans, installment loans, and "buy now, pay later" debt. If you did not pledge collateral, the debt dies in bankruptcy.

Utility Bills and Past-Due Rent

Old utility bills,electric, gas, water, internet,are dischargeable. Past-due rent from a lease you already vacated is also dischargeable. But if you currently live in a rental and want to stay, you must pay current rent going forward. The discharge only covers arrears from before you filed.

Repossession Deficiency Balances

If your car was repossessed and sold for less than you owed, the lender might claim you still owe the difference. That deficiency balance is dischargeable. Same with foreclosure deficiencies. Once the property is gone, any remaining debt can be wiped out.

Business Debts (If You're Personally Liable)

If you signed personally for business credit cards, lines of credit, or vendor accounts, those debts are dischargeable in a personal bankruptcy. The business entity might still owe, but you do not.

Nondischargeable Debt: What Bankruptcy Leaves Behind

These debts survive bankruptcy. The court will not erase them. You still owe them after your case closes.

Student Loans (Usually)

Federal and private student loans are nondischargeable unless you prove "undue hardship" in a separate adversary proceeding. That standard is brutally high. You must show that repaying the loan would prevent you from maintaining a minimal standard of living, that your financial situation is unlikely to improve, and that you made good-faith efforts to repay.

Most courts use the Brunner test, which fewer than 1% of filers pass. Some districts are loosening standards, but the default assumption is that student loans survive bankruptcy.

Recent Tax Debt

Income tax debt can be discharged, but only if it meets five strict conditions:

• The tax return was due at least three years before you filed bankruptcy
• You filed the return at least two years before filing bankruptcy
• The tax was assessed at least 240 days before you filed
• You did not commit fraud or willful evasion
• The debt is for income taxes, not payroll or fraud penalties

If your tax debt does not meet all five tests, it survives bankruptcy. Payroll taxes, trust fund taxes, and recent income taxes are always nondischargeable.

Child Support and Alimony

Domestic support obligations never disappear. Child support, spousal support, and alimony arrears are nondischargeable. Bankruptcy does not touch them. You still owe every dollar, and the creditor can still pursue collection through wage garnishment or contempt proceedings.

Debts from Fraud, Theft, or Willful Injury

If you obtained a debt through fraud,lying on a loan application, writing bad checks, embezzling,the creditor can challenge discharge. Same with debts from theft or intentional harm. The creditor must file an adversary proceeding and prove fraud by a preponderance of the evidence. If they win, that debt survives.

DUI Judgments and Restitution

If you caused injury or death while driving under the influence, any resulting debt is nondischargeable. Criminal restitution orders also survive bankruptcy. You must pay them.

HOA Fees and Condo Assessments (Sometimes)

If you still own the property, ongoing HOA fees accrue after filing and must be paid. Pre-filing arrears can be discharged if you surrender the property, but if you keep it, the lien survives and you must pay or risk foreclosure.

Secured Debt: You Decide What Happens

Secured debt,car loans, mortgages, furniture financing,works differently. The debt is tied to property. You have three options:

1. Surrender: Give back the property. The debt is discharged and you owe nothing.
2. Reaffirm: Sign a new agreement to keep paying. The debt survives bankruptcy and you remain liable.
3. Redeem: Pay the current value of the property in a lump sum. The debt is discharged and you own the property free and clear.

Most people either surrender or reaffirm. If you are current on a car loan and want to keep the car, you reaffirm. If the car is worth less than you owe or you cannot afford payments, you surrender and the deficiency is discharged.

Mortgages work the same way. If you want to keep your house, you must stay current and reaffirm or ride through (some courts allow this). If you cannot afford the house, you surrender and the foreclosure deficiency is discharged.

Priority Debt: The Stuff That Jumps the Line

Priority debts are nondischargeable and get paid first if you have any assets. These include:

• Recent income taxes (within three years)
• Child support and alimony arrears
• Wages you owe employees (if you own a business)
• Debts to government agencies for fines or penalties

In a Chapter 7 "no-asset" case, priority debt survives but is not paid through the bankruptcy. You still owe it after discharge. In a Chapter 13 case, priority debt must be paid in full through your repayment plan.

What Happens to Debt After Discharge

Once you receive your discharge order, creditors are barred from collecting discharged debt. They cannot call, sue, garnish, or report the debt as unpaid. If they do, you can sue them for violating the discharge injunction.

But the debt does not vanish from your credit report immediately. Discharged debts remain on your report for seven years from the date of first delinquency. The bankruptcy itself stays on your report for ten years. But the accounts should be marked "discharged in bankruptcy" or "included in bankruptcy," not "unpaid."

If a creditor tries to collect after discharge, send them a copy of your discharge order and tell them to cease contact. If they persist, contact a consumer rights attorney. Violations of the discharge injunction can result in damages and attorney fees.

How to Know What You Owe

Before filing, pull your credit reports from all three bureaus,Experian, Equifax, and TransUnion. You get one free report per year from each bureau at AnnualCreditReport.com. Review every account. Make a list of:

• Creditor name and address
• Account number
• Balance owed
• Date of last payment
• Whether the debt is secured or unsecured

Also gather statements for any debt not showing on your credit report,medical bills, payday loans, personal loans from family. You must list every creditor in your bankruptcy petition. If you forget a creditor, that debt might not be discharged.

When Bankruptcy Might Not Help

If most of your debt is nondischargeable,student loans, recent taxes, child support,bankruptcy might not solve your problem. In that case, you need a different strategy:

• Student loans: Apply for income-driven repayment, deferment, or forbearance. If you work in public service, pursue Public Service Loan Forgiveness.
• Taxes: Set up an installment agreement with the IRS or state tax agency. Or wait until the debt is old enough to discharge.
• Child support: Request a modification through family court if your income dropped.

But if you have significant dischargeable debt,credit cards, medical bills, personal loans,bankruptcy can still help by wiping out that portion and freeing up income to pay the nondischargeable debt.

What About Co-Signers?

If someone co-signed a loan with you, your bankruptcy does not protect them. In Chapter 7, creditors can pursue the co-signer for the full balance. In Chapter 13, co-signers are protected as long as you pay the debt in full through your plan.

If you care about protecting a co-signer, you have three options: pay the debt outside bankruptcy, file Chapter 13 and pay the debt through your plan, or reaffirm the debt in Chapter 7 (though this means you remain liable).

Getting Help With Your Debt

Most people are not sure which debts they owe or how bankruptcy will treat them. That is normal. Start by listing every debt you know about. Then talk to a bankruptcy attorney or use a free bankruptcy screening tool to see what can be discharged in your situation.

If bankruptcy looks like a fit, the next step is gathering documents,pay stubs, tax returns, bank statements,and deciding whether to file Chapter 7 or Chapter 13. Chapter 7 is faster and cheaper but requires passing a means test. Chapter 13 takes three to five years but can save your house or car if you are behind on payments.

Need to figure out if bankruptcy is right for you? Our bankruptcy guide walks through every step, from deciding to file to rebuilding credit after discharge. You can also connect with a local attorney who offers free consultations.

The bottom line: most debt dies in bankruptcy. The key is knowing which debts survive and planning around them.