Filing bankruptcy does not clear all debt. It eliminates most credit card balances, medical bills, and personal loans, but federal law protects a specific list of obligations from being wiped out — child support and alimony, most tax debts, most student loans, debts from fraud or intentional harm, DUI-related injury claims, and criminal fines and restitution all survive a bankruptcy discharge.1Office of the Law Revision Counsel. 11 US Code 523 – Exceptions to Discharge Whether bankruptcy is worth filing depends heavily on which side of that line your debts fall on.
What Bankruptcy Actually Clears
A discharge is a court order that permanently releases you from the legal obligation to repay certain debts. Once it is entered, creditors cannot call you, sue you, garnish your wages, or take any other collection action on the discharged amount, and a violation of that injunction can result in contempt sanctions.2Office of the Law Revision Counsel. 11 US Code 524 – Effect of Discharge
Most unsecured debts — the ones with no collateral backing them — are dischargeable. That includes:
- Credit card balances, unless the creditor proves fraud such as a spending spree right before filing
- Medical bills, regardless of amount
- Personal loans, payday loans, and other unsecured lending
- Past-due utility bills and back rent owed before filing (though you may need a new deposit to restore utility service)
- Deficiency balances after a repossession, meaning the gap between what the sale of the collateral brought in and what you still owed
- Some older income tax debts that meet strict timing rules, covered below
The discharge only covers debts that existed on the filing date. Anything you take on afterward is your problem.
Debts You Will Still Owe After Bankruptcy
Federal law carves out categories of debt that survive bankruptcy no matter which chapter you file.1Office of the Law Revision Counsel. 11 US Code 523 – Exceptions to Discharge Congress decided these obligations outweigh a debtor’s need for a fresh start.
- Child support and alimony. Domestic support obligations are never dischargeable, whether owed directly to a former spouse or child or assigned to a government agency.
- Most tax debts. Recent income taxes, payroll taxes, and any tax debt tied to a fraudulent return cannot be eliminated.
- Debts from fraud. Money obtained through lies on a credit application, false financial statements, or other deception survives bankruptcy. The creditor has to file a complaint in the bankruptcy case and prove the fraud, but these challenges are common.
- Debts for intentional injury. Deliberate harm to a person or their property is not dischargeable.
- DUI-related injury or death. Obligations from personal injury or death you caused while driving intoxicated follow you through bankruptcy.
- Criminal fines and restitution. Court-ordered penalties from criminal convictions are non-dischargeable.
- Fraud-related government overpayments. Debts from benefit overpayments obtained through fraud cannot be cleared.
For the fraud and intentional-harm categories, the creditor carries the burden of proof and must object within the bankruptcy case. If nobody objects, the debt gets discharged by default. That is why some creditors miss their window and lose the right to collect.
Student Loans: Presumed Not Dischargeable
Student loans sit in their own category. They are presumed non-dischargeable, but you can overcome that presumption by proving repayment would create an “undue hardship.” Doing so requires filing a separate lawsuit inside your bankruptcy case, called an adversary proceeding.3U.S. Department of Education. Undue Hardship Discharge of Title IV Loans in Bankruptcy Adversary Proceedings
Many courts apply the Brunner test, which requires showing three things: you cannot maintain a minimal standard of living while repaying, your situation is unlikely to improve for a significant part of the repayment period, and you made good-faith efforts to repay before filing. Other courts use a broader “totality of circumstances” approach that weighs your overall financial picture without rigid prongs.
The Department of Justice and Department of Education have issued joint guidance creating a standardized process for evaluating undue-hardship claims on federal student loans, under which DOJ attorneys review objective financial criteria rather than reflexively opposing every discharge request.4U.S. Department of Justice. Student Loan Guidance Borrowers with genuinely dire finances now have a more realistic path to discharge than before, though it still requires litigation and is not guaranteed.
When Old Tax Debts Can Be Cleared
Some older income tax debts can actually be discharged, but only if they clear every one of these hurdles at once:
- The return was due at least three years before you filed bankruptcy, counting valid extensions
- The return was actually filed at least two years before you filed bankruptcy
- The IRS assessed the tax at least 240 days before filing, or has not yet assessed it
- The return was not fraudulent and you did not willfully attempt to evade the tax
Miss any single condition and the tax debt survives. Payroll taxes and penalties tied to fraud never qualify regardless of age. Certain events, like a prior bankruptcy filing or an offer in compromise, can pause the clock on these deadlines, and getting the math wrong is one of the most costly mistakes in bankruptcy planning.
What Happens to Your Mortgage and Car Loan
Secured debts behave differently from credit cards or medical bills because the creditor holds a lien on specific property. Bankruptcy can eliminate your personal obligation to pay the loan, but it does not erase the lien itself. The lender can still foreclose on the house or repossess the car if you stop making payments, even after discharge.5United States Courts. Discharge in Bankruptcy – Bankruptcy Basics
In Chapter 7, you generally have three options for secured property:
- Surrender the property. You hand it back, your personal liability is discharged, and the debt is resolved.
- Reaffirm the debt. You sign a new agreement putting yourself personally on the hook again, as though no bankruptcy occurred. The court must approve it, and you receive disclosures about the risks.2Office of the Law Revision Counsel. 11 US Code 524 – Effect of Discharge
- Redeem it. Pay the creditor a lump sum equal to the property’s current value, not the full loan balance, and keep the item free of the lien. This only works for tangible personal property such as a car, not real estate, and requires the full payment at once.6Office of the Law Revision Counsel. 11 USC 722 – Redemption
In Chapter 13, secured debts run through your repayment plan. You can cure missed mortgage payments over three to five years while keeping the home, and in some cases you can reduce the principal on an older car loan to the vehicle’s current value.
Co-Signers Are Not Off the Hook
Your discharge only covers you. If someone co-signed a loan or credit card, that person remains fully liable for the debt after your bankruptcy wipes out your obligation, and the creditor can pursue them for the entire balance.
Chapter 13 offers a temporary shield called the co-debtor stay, which prevents creditors from going after co-signers on consumer debts while you are making plan payments.7Office of the Law Revision Counsel. 11 USC 1301 – Stay of Action Against Codebtor If your plan pays the co-signed debt in full, the co-signer is protected permanently. If it does not, the co-signer owes whatever is left. Chapter 7 offers no co-debtor stay at all, so creditors can pursue the co-signer immediately.
Does Chapter 13 Clear More Than Chapter 7?
Slightly, but less than it used to. Chapter 13 can discharge debts from divorce property settlements that are not domestic support obligations, while Chapter 7 cannot.8Office of the Law Revision Counsel. 11 US Code 1328 – Discharge Congress narrowed this advantage in 2005, and today fraud-based debts, student loans, DUI-related injury claims, criminal restitution, and domestic support obligations are non-dischargeable in both chapters.
Chapter 7 works as a liquidation, typically wrapping up in four to six months, with a trustee reviewing your assets and selling anything not protected by an exemption.9United States Courts. Chapter 7 – Bankruptcy Basics Chapter 13 requires a three-to-five-year repayment plan, at the end of which remaining qualifying debts are discharged.10United States Courts. Chapter 13 – Bankruptcy Basics Which chapter you can use depends partly on income: Chapter 7 requires passing a means test comparing your household income to the state median.
When the Court Can Refuse to Discharge Anything at All
Filing does not entitle you to a discharge. In Chapter 7, the court can refuse to grant one across the board — not just deny a single debt — if you engaged in certain misconduct. Grounds include hiding or destroying assets, falsifying financial records, lying under oath during the case, or refusing to obey court orders. A prior Chapter 7 discharge within the past eight years also bars a new one.11Office of the Law Revision Counsel. 11 US Code 727 – Discharge The trustee, a creditor, or the U.S. Trustee can raise these objections, and the outcome is severe: you go through the whole process, potentially lose assets, and end up with every debt intact.
Bankruptcy is a powerful tool, but the fresh start it offers is partial by design. Before filing, add up how much of what you owe actually falls in the dischargeable column. If most of it does, bankruptcy can genuinely clear the deck. If the bulk of your debt is child support, recent taxes, student loans, or criminal restitution, the discharge will leave those obligations exactly where they were.