Which Debts Can Possibly Be Forgiven Under Chapter 7?

Chapter 7 bankruptcy forgives most unsecured debts, and the debts forgiven under Chapter 7 bankruptcy typically include credit card balances, medical bills, personal loans, past-due utilities, old rent, and deficiency balances left after a repossession or foreclosure. The discharge usually arrives about four months after filing and permanently ends your personal liability for those debts. A defined set of obligations survives the process, though, including child support, most student loans, recent tax debts, and anything tied to fraud or deliberate harm.

Debts Chapter 7 Wipes Out

The core targets of a Chapter 7 discharge are everyday unsecured debts where no collateral backs the loan and the creditor’s only remedy was to sue you for money.

Credit card balances are fully dischargeable, including accumulated interest and late fees. Medical debt is fully dischargeable regardless of the balance, which matters because medical bills are one of the leading reasons people file. Personal loans from banks, credit unions, and payday lenders come off too.

Past-due utility bills, unpaid cellphone contracts, and rent owed on a previous lease are all dischargeable. If you went through a repossession or foreclosure before filing, the deficiency balance (the gap between what you owed and what the lender recovered by selling the property) generally goes with the discharge. Civil court judgments for unpaid debts or broken contracts can be eliminated as well, unless the underlying debt falls into one of the protected categories below.

Debts Chapter 7 Cannot Forgive

Federal law carves out specific categories of debt that survive a Chapter 7 discharge no matter how strong your case is otherwise.¹

Child support and alimony. All domestic support obligations are off limits, including court-ordered child support, spousal support, and related attorney fees awarded in divorce proceedings. No chapter of bankruptcy touches them.
Debts obtained by fraud. If you got money, property, or credit through misrepresentation, such as lying about your income on a loan application, the creditor can ask the court to block discharge of that specific debt.
Willful and malicious injury. Debts arising from intentional harm to another person or their property are non-dischargeable. Negligence isn’t enough; the harm has to have been deliberate.
Drunk driving injuries. If you caused death or personal injury while operating a vehicle under the influence, that debt survives. Property damage from a DUI incident may be dischargeable unless a creditor challenges it.
Government fines and penalties. Criminal restitution, court fines, and government-imposed penalties are generally non-dischargeable.
Post-filing HOA and condo fees. If you own a home in a homeowners association or condo, fees that come due after your bankruptcy filing date remain your responsibility as long as you hold title, even if you’ve moved out or told the court you plan to surrender the property.
Debts you didn’t list. Any debt left off your bankruptcy paperwork may not be discharged, which is why accurate schedules matter.²

When Tax Debts Can Be Discharged

Tax debt sits in a middle zone: some of it is dischargeable, but only when every part of what practitioners call the 3-2-240 rule is satisfied. Miss one element and the whole tax debt stays alive.

Three-year rule. The return for the tax in question must have been due (including extensions) more than three years before you filed for bankruptcy.³
Two-year rule. You must have actually filed that return at least two years before your bankruptcy petition. A substitute return the IRS prepared because you never filed doesn’t count.¹
240-day rule. The IRS must have assessed the tax at least 240 days before you filed, or not assessed it at all. Certain actions, like an offer in compromise or a prior bankruptcy, can pause and extend that clock.

Even when the timing works, the debt stays non-dischargeable if you filed a fraudulent return or willfully tried to evade the tax. There is also a practical catch. If the IRS recorded a tax lien against your property before you filed, that lien survives the discharge even though your personal liability ends. The IRS can still collect from the specific property the lien attached to after your case closes.¹

Student Loans Require a Separate Fight

Student loans, federal or private, are not automatically discharged in Chapter 7. To eliminate them you have to file a separate lawsuit inside your bankruptcy case, called an adversary proceeding, and prove that repayment would impose an undue hardship on you and your dependents.¹

Most federal courts use the Brunner test, which asks you to show three things: that you cannot maintain a minimal standard of living while paying, that your financial situation is likely to persist through much of the repayment period, and that you have made good-faith efforts to repay. The First and Eighth Circuits apply a broader totality-of-the-circumstances approach that considers your overall financial picture without the rigid three-prong structure.

In late 2022, the Department of Justice issued guidance directing federal attorneys to use a more structured and borrower-friendly framework in these cases. It applies under both Brunner and the totality-of-circumstances approach. Good faith can now be shown through a wider range of actions, and the analysis uses IRS expense standards to gauge whether a borrower can realistically afford payments.⁴

Discharge is more achievable than it was a decade ago, but filing Chapter 7 alone doesn’t trigger the analysis. You have to bring the adversary action and prove your case.

What Happens to Secured Debts

Debts backed by collateral, like a mortgage or car loan, work differently. Chapter 7 can wipe out your personal obligation to pay, but it does not remove the lender’s lien on the property. If you stop paying, the lender can still repossess or foreclose after the bankruptcy is over. When you file, you have to submit a Statement of Intention (Official Form 108) telling the court what you plan to do with each secured item.⁵

You have three choices.

Surrender

You give the property back to the lender. Any remaining balance on the loan after the lender sells the collateral becomes unsecured debt and is discharged with your other qualifying debts. Surrender is the cleanest option when the property is worth less than you owe or the payment is out of reach.

Reaffirmation

You sign a new agreement to keep paying the loan as though bankruptcy never happened. That debt is carved out of your discharge and you stay fully liable. If you later fall behind, the lender can repossess and sue you for any deficiency; you lose bankruptcy protection on that specific debt.⁶

If you negotiated the reaffirmation without a lawyer, the court has to approve it and confirm it does not impose an undue hardship. You can cancel the agreement until the later of 60 days after it is filed with the court or the date your discharge is entered.

Redemption

You pay the lender a single lump sum equal to the current value of the property, not the remaining loan balance, and keep the item free of the lien. Redemption applies only to tangible personal property used for personal or household purposes, so it works for cars and furniture but not for real estate. The obstacle is coming up with the cash, though some specialty lenders offer redemption loans for exactly this purpose.⁷

One Way to Lose a Discharge You Should Have Gotten

A debt that would otherwise be wiped out can survive simply because you failed to list it in your paperwork. The schedules you file are how the court and your creditors learn a debt exists, and a creditor who never gets notice may keep the right to collect after your case closes.² Pull your credit reports and gather every bill, judgment, and collection notice before you file, and list them all, even the ones you think are too small to matter.

1
Office of the Law Revision Counsel. 11 US Code 523 – Exceptions to Discharge
2
United States Courts. Discharge in Bankruptcy – Bankruptcy Basics
3
Internal Revenue Service. Declaring Bankruptcy
4
Federal Student Aid. Undue Hardship Discharge of Title IV Loans in Bankruptcy Adversary Proceedings
5
United States Courts. Official Form 108 – Statement of Intention for Individuals Filing Under Chapter 7
6
Office of the Law Revision Counsel. 11 USC 524 – Effect of Discharge
7
Office of the Law Revision Counsel. 11 USC 722 – Redemption