What Debts Can Be Discharged in Bankruptcy?

Debt stress hits fast, then the calls start, and it gets tough to see a way out. At Yusufov Law Firm PLLC, your preferred bankruptcy attorney in Mesa, Phoenix, and Tucson, we focus on real relief that fits your life. Bankruptcy can stop collector harassment, pause a foreclosure, and give you room to breathe while we sort the details.

In this article, we explain which debts you can eliminate in bankruptcy and which ones usually stick around.

Bankruptcy Discharge: The Basics

A discharge is a court order that wipes out your personal responsibility for certain debts. Once the court enters that order, the creditor cannot sue you, call you, or send letters to collect those discharged balances. The discharge is permanent, and breaking it can lead to penalties for the creditor.

There is one big caveat. A valid lien on property stays in place unless the court avoids it. That means the debt can be discharged, but the lender can still take the collateral if payments stop.

Knowing this difference helps you plan, especially if you want to keep a house or car while clearing the unsecured debt that is weighing you down.

Chapter 7 vs. Chapter 13: Discharge Differences

Chapter 7 is often called liquidation. A trustee can sell non-exempt assets to pay creditors, then most remaining unsecured debts get wiped out. For many people, exemptions protect everything they own, and the discharge comes about four-six months after filing, based on federal court guidance.

Chapter 13 is a reorganization with a repayment plan that runs three to five years. You make monthly payments based on your budget, then receive a discharge after completing the plan. This option can help you catch up on mortgage or car arrears while protecting the property you want to keep.

Feature	Chapter 7	Chapter 13
Main approach	Liquidation of non-exempt assets	3 to 5-year repayment plan
Typical discharge timing	About 4-6 months after filing	After the final plan payment
Keep property	Exempt items only, or by agreement	Keep all property
Best fit	Low income, little equity, heavy unsecured debt	Steady and higher income, or need to save house or a car

 

Both chapters trigger the automatic stay the day you file, which stops most collections and lawsuits while your case moves forward.

Debts Typically Discharged in Bankruptcy

Most unsecured consumer debt gets wiped out in bankruptcy. Below is a helpful list of common debts that are usually cleared in both Chapter 7 and Chapter 13.

Commonly Discharged Debts

• Credit card debt
• Medical bills
• Personal loans
• Payday loans
• Unpaid utility bills
• Deficiency balances after repossession or foreclosure
• Court judgments for unpaid credit card debt or medical bills

These debts are often the ones choking your budget, so clearing them can free up money for essentials and secured payments.

Debts Not Typically Discharged in Bankruptcy

Some debts are treated differently under 11 U.S.C. § 523(a). These are either never discharged or require a separate lawsuit in the bankruptcy court to determine if they can be discharged.

Non-Dischargeable Debts

• Child support and alimony
• Certain tax debts, including recent income taxes and payroll taxes
• Debts for willful and malicious injury to another person or property
• Debts for death or personal injury caused by intoxicated driving
• Fines, penalties, and criminal restitution orders
• Student loans, except in rare, undue hardship cases
• Debts not listed in the bankruptcy filing
• HOA dues that come due after the bankruptcy is filed

If you have a mix of dischargeable and non-dischargeable debts, clearing the first group can still make the second group manageable.

Tax Debt and Bankruptcy

Income tax debt that is older than three years can be dischargeable if it meets the timing and filing rules. The return must have been filed, and the tax must have been assessed long enough before your case, among other conditions. Getting the dates right is critical to this part of the analysis.

If discharge is not available, the IRS offers tools like payment plans and Offers in Compromise. Those options can work hand in hand with bankruptcy to clean up the rest of your balance sheet.

Student Loan Debt and Bankruptcy

Student loans are usually not discharged unless you prove undue hardship. In late 2022, the U.S. Department of Justice issued guidance that gives a clearer path in federal student loan cases, which has helped some borrowers. Results still depend on your facts, but the door is more open than before.

You need a separate lawsuit inside the bankruptcy case, called an adversary proceeding, to ask the judge to find undue hardship. Both federal and private student loans can be discharged by proving undue hardship, although the process for each can be different.

Secured Debts: Mortgages and Car Loans

Secured debts are tied to collateral, like your home or car. Bankruptcy can discharge your personal obligation to pay, but the lien stays unless the court removes it or the lender agrees to release it. If payments stop while the lien is in place, the lender can still take the property back.

In Chapter 7, you can keep the property if you stay current or reach an agreement, and you can also surrender it and owe nothing further. Chapter 13 lets you catch up on missed payments over time, which helps many people keep their home or car.

When Creditors Object to Discharge

Creditors can object to the discharge of their debt if they believe there was fraud or misrepresentation, or other improper conduct. Common triggers include luxury purchases right before filing, cash advances close to filing, or false information on a credit application. If they sue in the bankruptcy court and win, that debt survives the case.

To reduce the chance of an objection, stop using credit cards once you decide to file. A short pause here can save a long fight later.

Simple steps help lower risk right away:

1. Freeze credit card use it as soon as you plan to file.
2. Avoid new loans or balance transfers before filing.
3. Be accurate and complete in your paperwork.

These small steps help your case go smoother and protect the discharge you are working hard to earn.

Explore Your Options with Yusufov Law Firm

Our team helps people and small businesses get relief from debt and rebuild with confidence. We handle Chapter 7, Chapter 13, and Chapter 11, and the issues that come with them, including tax concerns, student loans, and creditor lawsuits. If you are weighing next steps, we are ready to talk through your choices.

Contact Yusufov Law Firm PLLC to discuss your situation and get a clear plan that fits your goals. Call (520) 745-4429 or (480) 788-0098 or reach us through our Contact Us Page. We are committed to practical, results-focused debt relief for clients in Mesa, Phoenix, and Tucson.