Does Bankruptcy Clear All Debt? What Gets Erased and What Survives
No, but it clears the debts most people are drowning in. Credit cards, medical bills, personal loans, old utility and phone bills, repossession deficiencies, and most other unsecured debts are discharged. What survives, in any chapter, includes child support and alimony, most student loans (absent a proven undue hardship), recent income taxes, criminal fines and restitution, debts from fraud, and any debt you leave off your paperwork.
Anyone who tells you bankruptcy wipes out everything is selling something, and anyone who tells you it wipes out nothing is repeating a myth. The truth has a clean shape, so here it is in both directions.
What bankruptcy clears
The discharge eliminates most unsecured debt, debt with no collateral behind it. That covers the categories most filers are drowning in:
- Credit cards, all of them, including store cards
- Medical bills, fully dischargeable, no special rules
- Personal loans and payday loans
- Old utility, phone, and subscription balances
- Collection and charged-off accounts
- Deficiency balances, what is left over after a repossession or foreclosure sale
The discharge is a permanent federal court order. A creditor who tries to collect a discharged debt is violating a federal injunction. And medical debt deserves its own sentence, because the shame around it is so misplaced: it is one of the most commonly cited contributors to consumer bankruptcy in America, and the system discharges it as routinely as any credit card.
What survives, in any chapter
Congress made a short list of debts that are never discharged or survive by default:
- Child support and alimony. Never discharged, in any chapter, period. Bankruptcy actually gives these top priority for payment.
- Most student loans. They survive unless you separately prove "undue hardship" in a mini-lawsuit inside your case. That has become more attainable for federal loans since 2022, and the details are worth knowing.
- Recent income taxes. Older income tax debt can sometimes be discharged under strict timing rules, covered here, but recent taxes survive.
- Criminal fines, court fees, and restitution.
- Debts from fraud or willful and malicious injury, and debts from injuring someone while driving intoxicated.
- Debts you leave off your paperwork. List everything. There is no picking and choosing which creditors go in the case, and hiding one can cost you its discharge.
One behavioral warning that belongs on this list: recent luxury purchases and cash advances shortly before filing are presumed nondischargeable. Running up the cards on the way in looks like fraud to the court. Once bankruptcy is on your radar, stop using credit.
Secured debts: a different question entirely
Mortgages and car loans live by different rules. The discharge erases your personal obligation, but the lender's lien on the property survives. In practice: keep paying, keep the property; stop paying, the lender can take the collateral but cannot come after you for the balance. The full picture is in can you keep your house and car.
Does Chapter 13 change the list?
Mostly no, the never-discharged core is the same, though Chapter 13's discharge covers a few categories Chapter 7's does not, and its 3-to-5-year plan can make survivable debts manageable: support arrears and recent taxes get organized into one payment with the automatic stay protecting you throughout. For someone whose problem debts are the nondischargeable kind, that structure, not the discharge itself, is often the real relief. Comparing the two chapters honestly is exactly what this guide and our free course lessons are for.
The bottom line
For the typical filer, whose problem is credit cards, medical bills, and personal loans, bankruptcy clears the debts doing the damage. The exceptions are real but predictable, and none of them are secrets an attorney will spring on you later. Walk in knowing the list and you can make the decision with clear eyes.
Related questions
What debts are wiped out by Chapter 7?
Most unsecured debt, credit cards, medical bills, personal loans, payday loans, old utility bills, collection accounts, and deficiency balances from repossessions and foreclosures. The discharge permanently ends your legal obligation to pay them.
What debts cannot be discharged in bankruptcy?
Child support and alimony are never discharged in any chapter. Most student loans survive unless you separately prove undue hardship. Recent income taxes, criminal fines and restitution, debts from fraud or willful injury, DUI injury debts, and debts not listed in your paperwork also survive.
Does bankruptcy get rid of medical debt?
Yes. Medical bills are ordinary unsecured debt and are fully dischargeable, with no special rules or limits. Medical debt is one of the most commonly cited contributors to consumer bankruptcy, and the system handles it routinely.
This is education, not legal advice. Bankruptcy law is federal, but exemptions and key details vary by state, and every situation is different. Nothing here creates an attorney-client relationship. Before you make decisions about your finances, talk to a licensed bankruptcy attorney in your state. This article should make that conversation easier, not replace it.