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What Types of Debt Get Discharged in Chapter 7 Bankruptcy?

All across the country, individuals and families are struggling with growing financial debt. This stressful situation has been amplified by a stressful world as the rippling effects of the COVID-19 pandemic continue to stretch us thin. As you explore your debt-relief options, you may wonder whether filing for Chapter 7 bankruptcy can give you the fresh financial start you need. Chapter 7 bankruptcy allows you to “wipe out” or discharge several types of debt. Let’s take a look at what debts are dischargeable under a Chapter 7 bankruptcy filing so you can determine the most successful course of action.

Dischargeable Debts Under Chapter 7 Bankruptcy

Under Chapter 7 bankruptcy, most unsecured debts can be discharged. Unsecured debt refers to any debt obligation that is not backed by collateral (i.e., a credit card contract). Those struggling with credit card charges and unpaid medical bills often find success through Chapter 7 bankruptcy. Other types of dischargeable debts include collection agency accounts, personal loans, and past-due utility bills.

Debts That Cannot Be Discharged Under Chapter 7

In most cases, there are certain types of debt that are not dischargeable under a Chapter 7 bankruptcy filing. Student loans, though a form of unsecured debt, cannot be discharged. Additionally, any debt incurred through fraud or false pretenses (i.e., overstating your income to qualify for a loan or credit card) cannot be discharged. While most tax debts do not qualify as dischargeable, there are circumstances in which certain tax debts may be discharged.

How a New York Bankruptcy Attorney Can Help

Even though bankruptcy offers hope for people struggling with insurmountable debt, many people feel embarrassed or even ashamed of taking this step. Working with a compassionate bankruptcy lawyer is the best way to feel supported and reassured that you are taking the necessary steps to rebuild your financial future. The bankruptcy process often feels overwhelming, so trust your attorney to guide you through each phase of the process so you can feel confident with each decision you make. Together, you can move toward a brighter and more stable future.


Learn more about the benefits of pursuing Chapter 7 bankruptcy relief in New York by calling Grady BK, PLLC, today at (315) 299-9005.