Will Bankruptcy Wipe Out ALL My Debts?

formsOne of the main benefits of Chapter 7 bankruptcy is the ability to eliminate debts and get a fresh start. But exactly which debts are wiped in Chapter 7? Will you really have a clean state to rebuild your finances on?

A discharge releases the debtor from liability for debts and stops creditors from pursuing collection against the debtor.

The good news: many debts are dischargeable in bankruptcy, and Chapter 7 does not take very long to complete (usually a few months). The bad: not all debts can be discharged, and you may have to make other sacrifices.

What Debts Can Be Discharged in Chapter 7?

Under the Bankruptcy Code, there are 19 categories of debt that cannot be discharged. These include:

  • Unscheduled debts (debts you fail to list on your bankruptcy petition or mailing list)
  • Some taxes
  • Spousal or child support, as well as other debts owed for former spouses or children after a divorce
  • Fines and penalties owed to government agencies
  • Student loans
  • Debts owed due to personal injury caused by the debtor’s DUI/DWI
  • Attorney fees in certain cases as well as court fines and penalties
  • Debts owed for certain retirement plans

There is a wide variety of debts that you can get rid of in Chapter 7, however. These include:

  • Credit card debt
  • Medical expenses
  • Lawsuit judgments against you
  • Some obligations under leases and contracts
  • Personal loans you can’t pay back
  • Promissory notes

If you are considering bankruptcy, you will need to take extensive inventory of all of your assets and debts and make sure you get it right the first time. The best way to do this is to consult with a qualified bankruptcy attorney in your area.



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