What Debts Can and Cannot Be Discharged in Bankruptcy?

One of the most common misconceptions about bankruptcy is that it eliminates all debt — or, conversely, that it does not eliminate enough debt to be worth pursuing. Neither extreme is accurate. Bankruptcy discharges a specific, defined category of debts while leaving others intact. Understanding exactly which debts survive bankruptcy and which are permanently eliminated is one of the most important pieces of information a person can have when evaluating whether to file.

This guide provides a complete, plain-language breakdown of dischargeable and non-dischargeable debts under both Chapter 7 and Chapter 13 bankruptcy — including some important distinctions that apply to Chapter 13 specifically — and explains why the exceptions to discharge exist.

What Does ‘Discharge’ Mean?

A discharge is a permanent court order that legally eliminates a debtor’s personal liability for specific debts. Once a debt is discharged, the creditor is permanently prohibited from taking any action to collect it — no calls, no letters, no lawsuits, no wage garnishments, no bank levies. Attempting to collect a discharged debt is a violation of the discharge injunction and can subject the creditor to contempt sanctions by the bankruptcy court.

The discharge applies to the debtor personally — it does not eliminate the debt if someone else also signed for it (such as a co-signer) and it does not eliminate a lien on property (which is a separate issue from personal liability). It does, however, permanently extinguish the debtor’s obligation to pay.

Debts That CAN Be Discharged

The following categories of debt are dischargeable in Chapter 7 and Chapter 13 bankruptcy. In a successful case, these debts are permanently eliminated at the conclusion of the bankruptcy process:

Credit Card Debt

Credit card balances — including accumulated interest, late fees, over-limit charges, and any other fees assessed by the card issuer — are fully dischargeable unsecured debt. This is the single most common type of debt addressed in Las Vegas bankruptcy cases. Credit card debt is dischargeable regardless of how large the balance is, how many years it has been accumulating, or which creditor holds the account.

One important exception: charges made with the fraudulent intent to discharge them in bankruptcy may be challenged. Specifically, luxury purchases of more than $725 charged within 90 days of filing, and cash advances of more than $1,000 taken within 70 days of filing, are presumed to be non-dischargeable fraud unless the debtor can rebut the presumption. Ordinary purchases and everyday usage are not affected by this rule.

Medical Bills and Hospital Debt

Medical debt is fully dischargeable in bankruptcy and is one of the leading causes of bankruptcy filings in the United States. Medical bills — from emergency room visits, hospitalizations, surgeries, specialist care, laboratory services, and ongoing treatment — are treated as general unsecured debt. They receive no special protection and are fully eliminated by discharge. This applies to bills owed directly to hospitals, to physicians, to collections agencies that have purchased the debt, and to medical financing companies.

Personal Loans and Payday Loans

Personal loans from banks, credit unions, online lenders, and family members are unsecured debts dischargeable in bankruptcy. Payday loans — a particularly predatory form of short-term lending whose fees and interest rates can create rapidly compounding debt — are also dischargeable, despite the aggressive collection tactics sometimes employed by payday lenders. Payday lenders are subject to the same automatic stay as any other creditor and must cease collection once a bankruptcy petition is filed.

Utility Arrears and Past-Due Rent

Past-due utility balances and unpaid rent — including back rent owed to a previous landlord — are generally dischargeable as unsecured debts. Note that while past-due amounts can be discharged, the lease itself is treated as an executory contract that must be specifically addressed in the bankruptcy (assumed or rejected). Ongoing utility service requires that new deposits be paid, but existing arrears can be eliminated.

Certain Older Tax Debts

Income tax debt is dischargeable under specific conditions. To be dischargeable, the tax debt must meet all of the following criteria: the tax return was due at least three years before the bankruptcy filing; the return was actually filed at least two years before the filing; the tax was assessed by the IRS at least 240 days before the filing; the return was not fraudulent; and the taxpayer was not guilty of tax evasion. When all of these conditions are met, the income tax debt can be discharged just like credit card debt. Tax debts that do not meet these conditions are non-dischargeable.

Deficiency Balances After Repossession

When a secured asset — most commonly a vehicle — is repossessed and sold by the creditor, the remaining balance after the sale (called the deficiency balance) is treated as unsecured debt. This deficiency is dischargeable in bankruptcy. Homeowners who have had a property foreclosed and are left with a deficiency balance on a home equity loan or second mortgage may also be able to discharge that deficiency.

Civil Court Judgments (Non-Fraud, Non-Willful)

A judgment entered against you in civil court does not make the underlying debt non-dischargeable. If the debt that gave rise to the judgment was otherwise dischargeable (such as a credit card debt that went to collections and resulted in a court judgment), the judgment itself can be discharged in bankruptcy. The judgment lien on real property is a separate matter that may require an additional adversary proceeding to avoid.

Debts That CANNOT Be Discharged

The following categories of debt survive bankruptcy discharge. They remain legally collectible after the bankruptcy case closes — meaning the creditor retains all rights to pursue collection after the automatic stay lifts.

Child Support and Alimony (Domestic Support Obligations)

Child support and alimony obligations are absolutely non-dischargeable under both Chapter 7 and Chapter 13 bankruptcy. 11 U.S.C. § 523(a)(5) explicitly exempts domestic support obligations from discharge. Arrears in child support or alimony that have accumulated before the filing remain fully enforceable after bankruptcy. In Chapter 13, domestic support obligations are treated as priority debts that must be paid in full through the repayment plan — they cannot be reduced or stretched beyond the plan period.

Most Student Loan Debt

Student loans — whether federally guaranteed or private — are non-dischargeable in bankruptcy except in cases of ‘undue hardship.’ The undue hardship standard is very difficult to meet and requires a separate adversary proceeding within the bankruptcy case. Courts have generally applied a demanding three-part test (the Brunner test) that requires demonstrating inability to maintain a minimal standard of living while repaying the loans, that circumstances are likely to persist for a significant portion of the repayment period, and that good faith efforts to repay have been made. While student loan discharge is possible in some cases, it should not be assumed.

Recent Income Tax Debts and Certain Tax Obligations

Tax debts that do not meet the conditions described in the dischargeable section — specifically, income tax debts that are too recent, were assessed too recently, or involve fraudulent returns — are non-dischargeable. Payroll taxes (taxes an employer was required to withhold from employees’ wages), fraud penalties, and tax penalties for willful evasion are also non-dischargeable.

Debts Arising From Fraud

Debts incurred through fraud, false pretenses, or false representation are non-dischargeable under 11 U.S.C. § 523(a)(2). For this exception to apply, the creditor must typically file an adversary proceeding within the bankruptcy case to challenge the discharge of the specific debt, and must prove that fraud occurred. General financial irresponsibility or poor judgment does not constitute fraud. Actual misrepresentation — lying on a loan application, using false financial statements, or intentionally obtaining credit with no intention of repaying — is required.

Debts From Willful or Malicious Injury

Debts arising from intentional harm — assault, battery, conversion of property, and similar willful or malicious acts — are non-dischargeable. Negligence, by contrast, is typically dischargeable. The distinction is intent: an accidental car accident that results in a civil judgment would generally be dischargeable; a deliberately caused injury would not be.

Criminal Fines, Restitution, and Penalties

Fines and penalties payable to government entities — including criminal fines, court-ordered restitution, and traffic violations — are non-dischargeable. This prevents bankruptcy from being used as a mechanism to escape criminal accountability.

Debts From DUI-Related Death or Personal Injury

Personal injury or wrongful death claims arising from the debtor’s operation of a motor vehicle while intoxicated are explicitly non-dischargeable under 11 U.S.C. § 523(a)(9). This exception reflects the policy that personal accountability for impaired driving consequences should not be extinguished through the bankruptcy process.

HOA Fees Assessed After Filing

While pre-petition HOA fee arrears can be discharged, ongoing HOA fees that accrue after the bankruptcy filing on property the debtor retains are non-dischargeable. If the debtor is surrendering the property in the bankruptcy, fees that accrue until the property is legally transferred may also not be dischargeable. This is a nuanced area where the specific facts of the case matter significantly.

Special Rules for Chapter 13: Debts That Cannot Be Discharged in Chapter 7 but CAN Be Addressed in Chapter 13

Chapter 13 has a broader discharge provision than Chapter 7 in certain respects. Some debts that are non-dischargeable in Chapter 7 can be addressed — though not always discharged — through a Chapter 13 repayment plan:

• Recent income tax debts that do not qualify for Chapter 7 discharge can be paid through a Chapter 13 plan, spreading the payments over the plan period without further penalties or interest from the IRS accruing on the plan balance
• Domestic support arrears must be paid in full in Chapter 13, but the plan provides a structured, court-enforced mechanism to catch up on child support or alimony arrears that have accumulated
• Non-dischargeable fraud debts can be paid through a Chapter 13 plan, resolving them without the need for creditors to pursue separate collection actions
• The Chapter 13 ‘superdischarge’ — available only to debtors who complete the full plan — covers some debts that Chapter 7 does not discharge, including certain debts arising from willful injury to property (though not to persons) and debts not listed in the Chapter 7 non-discharge exceptions

Why the Discharge Exceptions Exist

The non-dischargeable debt categories are not arbitrary — they reflect a deliberate Congressional judgment that the public interest in enforcing specific obligations outweighs the debtor’s interest in a complete fresh start. Child support and alimony protect dependent family members. Student loan non-dischargeability reflects the public investment in education financing. Tax non-dischargeability prevents the evasion of civic financial obligations. Fraud exceptions prevent the bankruptcy process from being weaponized against creditors who were deceived.

Understanding why these exceptions exist helps clarify the underlying logic of the discharge system: bankruptcy is designed to give honest debtors who are overwhelmed by circumstances a genuine fresh start — not to provide relief from obligations that reflect personal accountability, family responsibility, or harm to others.

The Practical Takeaway: Does Bankruptcy Work for Your Debts?

For the majority of Las Vegas residents considering bankruptcy — people dealing with credit card debt, medical bills, personal loans, payday loans, and related unsecured obligations — bankruptcy will discharge most or all of their problem debt. The non-dischargeable categories affect a minority of debtors and do not prevent bankruptcy from providing substantial, permanent relief to those whose debt consists primarily of dischargeable obligations.

The only way to know with precision how the discharge rules apply to your specific debt mix is to have a qualified bankruptcy attorney review your situation. A brief consultation — which at DeLuca & Associates is always free — can tell you exactly which of your debts would survive bankruptcy and which would be permanently eliminated.

This article is for general informational purposes only and does not constitute legal advice. Every bankruptcy case is unique. Please consult with a qualified Las Vegas bankruptcy attorney to evaluate your specific financial situation.

Understanding which debts can be discharged is the foundation of any sound bankruptcy decision — and the analysis is specific to each person’s situation. DeLuca & Associates Bankruptcy Law has been helping Nevada residents navigate Chapter 7 and Chapter 13 bankruptcy since 2001, providing the clear, honest legal guidance our clients need to make decisions with confidence. Our consultations are always free, always confidential, and always handled by experienced attorneys — not paralegals. Call us today or visit our website to schedule your appointment and find out exactly what bankruptcy can do for your financial situation.