{"id":19573,"date":"2023-04-12T13:36:30","date_gmt":"2023-04-12T19:36:30","guid":{"rendered":"https:\/\/www.lexingtonlaw.com\/blog\/?p=19573"},"modified":"2025-06-06T14:37:05","modified_gmt":"2025-06-06T20:37:05","slug":"debts-eliminated-with-bankruptcy","status":"publish","type":"post","link":"https:\/\/www.lexingtonlaw.com\/blog\/life-events\/debts-eliminated-with-bankruptcy.html","title":{"rendered":"What debts can and can\u2019t be discharged from a bankruptcy?"},"content":{"rendered":"\n
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The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. <\/em>See Lexington Law\u2019s editorial disclosure for more information.<\/em><\/a><\/p>\n\n\n\n

Declaring bankruptcy doesn\u2019t eliminate all debts. Some debts a bankruptcy won\u2019t discharge include tax debt, child support, alimony and court-ordered fines and fees.<\/p>\n\n\n\n

The U.S. Courts<\/a> reported that bankruptcies fell nearly 12 percent in 2022 compared to the previous year, but there were still nearly 400,000 filings overall. Only 13,125 of these were business bankruptcies, which means that hundreds of thousands of Americans are still filing for bankruptcy each year. Bankruptcy<\/a> can help you manage or even eliminate debts, but do you get out of all debts if you declare bankruptcy?<\/p>\n\n\n\n

Here, you\u2019ll learn what bankruptcy can and can\u2019t do as well as the pros and cons of filing. By understanding the ins and outs of bankruptcy, you\u2019ll have a better idea of if it\u2019s the right choice for you or if you should seek an alternative method of taking care of your debt.<\/p>\n\n\n\n

<\/a>What happens when you file for bankruptcy?<\/h2>\n\n\n\n

When you file for bankruptcy, you\u2019re petitioning the court to begin the process of eliminating your debt or getting on a repayment plan. Once filed, there are additional steps you must take to get approved for your bankruptcy. If the bankruptcy is approved and all goes to plan, you\u2019ll receive a discharge. Otherwise, you\u2019ll receive a denial, which is also known as a dismissal.<\/p>\n\n\n\n

The most common forms of bankruptcy for individuals are Chapter 7<\/a> and Chapter 13<\/a>. Each one offers unique benefits as well as disadvantages. But whether you file for Chapter 7 or Chapter 13, the bankruptcy filing process is similar. Here\u2019s a brief overview of the steps to file for bankruptcy from start to discharge:<\/p>\n\n\n\n

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  1. Meet with an attorney if possible.<\/li>\n\n\n\n
  2. File with the court.<\/li>\n\n\n\n
  3. Organize your financial information.<\/li>\n\n\n\n
  4. Meet with a bankruptcy trustee.<\/li>\n\n\n\n
  5. Take mandatory debt counseling courses.<\/li>\n\n\n\n
  6. Receive a discharge or dismissal.<\/li>\n<\/ol>\n\n\n\n
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    <\/a>Chapter 7 vs. Chapter 13 bankruptcy<\/h2>\n\n\n\n

    The primary difference between Chapter 7 and Chapter 13 bankruptcies is that Chapter 7 eliminates debts and Chapter 13 puts you on a repayment plan.<\/p>\n\n\n\n

    Chapter 7 bankruptcy is also known as a \u201cliquidation\u201d bankruptcy because it\u2019s the most common option for eliminating most of your debt. During the Chapter 7 bankruptcy process, you meet with a trustee who will review all of your assets and decide which assets need to be sold to pay back creditors.<\/p>\n\n\n\n

    Some of your assets may be exempt from being sold during a bankruptcy\u2014these nonexempt items will vary from state to state. Once the assets are liquidated to repay creditors, many of the remaining debts will be eliminated once discharged.<\/p>\n\n\n\n

    Chapter 13 bankruptcy puts you on a repayment schedule with your creditors. When you meet with a trustee during the Chapter 13 process, you\u2019ll submit a proposal for a repayment plan based on your income, expenses and other financial circumstances. If approved, you\u2019ll repay your creditors over the next three to five years before the bankruptcy is discharged.<\/p>\n\n\n\n

    Both bankruptcy types stay on your credit report, but Chapter 13 stays on your report for only seven years, while Chapter 7 stays for 10 years before the bankruptcy is removed<\/a>.<\/p>\n\n\n\n

    <\/a>Do you get out of all debts if you declare bankruptcy?<\/h2>\n\n\n\n

    Neither kind of bankruptcy will eliminate all your debts. Bankruptcy doesn\u2019t eliminate secured liens or prevent repossessions of property. A discharged bankruptcy also doesn\u2019t cover court-ordered fines or fees, tax debts, alimony or child support.<\/p>\n\n\n\n

    <\/a>What debts are never discharged by bankruptcy?<\/h2>\n\n\n\n

    Simply put, debts that aren\u2019t discharged by a bankruptcy are usually debts owed to the government or to the courts.<\/p>\n\n\n\n

    In addition to the debts covered in the previous section, bankruptcy won\u2019t eliminate:<\/p>\n\n\n\n