Bankruptcy can wipe out credit cards, medical bills and personal loans, but federal law carves out some debts that survive it. If much of what you owe falls into these categories, it changes whether bankruptcy would really solve the problem.
These exceptions are listed in the Bankruptcy Code, mainly in section 523.[1] This page covers the common ones in general terms. How they apply to a particular debt can turn on details, so an attorney is the right person to check yours.
The main debts that survive bankruptcy
| Debt | Why it survives |
|---|---|
| Child support and alimony | Domestic support obligations can’t be discharged in either chapter.[1][5] |
| Student loans | Government-made or government-backed loans and qualified private education loans are discharged only if repaying them would be an “undue hardship,” which takes a separate lawsuit within the bankruptcy.[1][2] |
| Certain taxes | Some tax debts survive, including recent income taxes, taxes for years a return was filed late or not at all, and taxes tied to a fraudulent return or evasion.[1][3] |
| Debts from fraud | Debts obtained through fraud or false pretenses can be declared nondischargeable if the creditor challenges them. That includes luxury purchases or cash advances above set amounts made shortly before filing, which the law presumes nondischargeable.[1] |
| Fines, penalties and restitution | Fines and penalties owed to a government (other than compensation for an actual loss and some tax penalties), and certain criminal restitution orders.[1] |
| Drunk-driving injury debts | Debts for death or injury caused while driving intoxicated can’t be discharged.[1] |
| Debts you don’t list | A debt left off your bankruptcy forms may not be discharged in some cases, so list every creditor.[1][9] |
Some exceptions aren’t automatic
For some debts, including those based on fraud, the creditor has to go to the bankruptcy court and ask for the debt to be excluded from the discharge. If the creditor doesn’t, the debt can be discharged.[1][9] Others, like child support and the taxes covered by these exceptions, survive without any action by the creditor.[9]
Secured debts work differently
Bankruptcy can end your personal obligation on a car loan or mortgage, but the lender’s lien generally survives. If you want to keep the car or house, you generally still have to pay for it.[9]
Chapter 13 is somewhat broader
A Chapter 13 discharge granted after all plan payments are made covers some debts that a Chapter 7 discharge doesn’t.[5][9] Chapter 13 can also help with some debts that can’t be discharged at all: priority claims, including past-due support and priority taxes, are generally paid through the three-to-five-year plan.[4]
Options for debts that survive
- Child support and alimony: if your income has dropped, the family court that issued the order is where to ask about a modification. Bankruptcy doesn’t change these orders.
- Federal student loans: repayment options, including plans based on income, are explained at studentaid.gov.[6] For bankruptcy, the Justice Department has published guidance on how it evaluates undue hardship claims on federal loans.[2]
- Taxes: the IRS offers payment plans, and in some cases settles for less than the full amount.[7]
- Fines and restitution: the court or agency that imposed them is where to ask about payment options.
Run the numbers before you file
Add up the debts bankruptcy would erase separately from the ones it wouldn’t. If most of what you owe is credit cards and medical bills, bankruptcy may clear the bulk of it and free up income for the rest. If most of it is student loans, taxes or support, bankruptcy alone won’t solve the problem, and the other options above matter more.
See the whole picture first
The bankruptcy guide explains Chapter 7 and Chapter 13. The Debt Audit shows how long paying off on your own would take and which path fits your numbers. It takes about five minutes, and nothing you enter is stored or sent.
Run the Debt AuditFrequently asked questions
What two debts cannot be erased by bankruptcy?
The two most often named are child support or alimony, and student loans (unless repaying them would be an undue hardship). They aren’t the only ones: certain taxes, debts from fraud, certain government fines and penalties, and debts from drunk-driving injuries also survive.
Can student loans be discharged in bankruptcy?
Only by proving that repaying them would be an undue hardship, in a separate lawsuit within the bankruptcy. The Justice Department has published guidance on how it evaluates these claims for federal student loans.
Can bankruptcy erase tax debt?
Sometimes. Older income taxes that meet specific timing rules may be dischargeable, while recent taxes, taxes for unfiled or late returns, and taxes tied to fraud aren’t. An attorney can check the dates for your returns.
Does bankruptcy stop child support collection?
Not entirely. Wage withholding, license suspension, tax refund intercepts and some other support collection continue during bankruptcy, and the debt survives it.[8]
What happens if I forget to list a debt?
Depending on the chapter and the circumstances, an unlisted debt may not be discharged. Listing every creditor is one of the most important parts of the forms.
Related
- Bankruptcy: Chapter 7 vs. Chapter 13
- Can you file bankruptcy without a lawyer?
- How to rebuild credit after bankruptcy
Sources
- 11 U.S.C. § 523, Exceptions to discharge. U.S. Government Publishing Office (govinfo).
- Student Loan Guidance. U.S. Trustee Program, U.S. Department of Justice.
- Declaring Bankruptcy. Internal Revenue Service.
- Chapter 13: Bankruptcy Basics. United States Courts.
- 11 U.S.C. § 1328, Discharge. U.S. Government Publishing Office (govinfo).
- Repayment Plans. Federal Student Aid, U.S. Department of Education.
- Topic no. 202, Tax payment options. Internal Revenue Service.
- 11 U.S.C. § 362, Automatic stay. U.S. Government Publishing Office (govinfo).
- Discharge in Bankruptcy: Bankruptcy Basics. United States Courts.