Which debts bankruptcy cannot erase

Bankruptcy can wipe out credit card debt, medical bills, personal loans, and most unsecured debts. But certain obligations follow you through the process and remain your responsibility after discharge. The most common non-dischargeable debts are student loans, child support, alimony, recent tax debt, and criminal fines. Some debts tied to fraud or willful injury also survive. The reason these debts persist is deliberate: Congress and the courts treat them as obligations tied to public policy, family support, or harm to others — not ordinary financial mismanagement.

Understanding which debts you cannot shed matters before you file, because bankruptcy costs money and time. If most of your debt falls into non-dischargeable categories, bankruptcy may not solve your problem. If your debt is mixed — some dischargeable, some not — you need to know which portion will remain so you can plan for it.

Key Takeaways

  • Student loans, child support, alimony, and recent tax debt cannot be discharged in bankruptcy under any normal circumstance.
  • Criminal fines, restitution ordered by a court, and debts from fraud or willful injury also survive bankruptcy.
  • Some student loans can be discharged only if you prove undue hardship in a separate court proceeding, which is difficult and rare.
  • Debts owed to government agencies for overpaid benefits (like unemployment or welfare) are generally non-dischargeable.
  • A bankruptcy discharge removes your legal obligation to pay dischargeable debts, but creditors can still pursue non-dischargeable ones after your case closes.

Student loans and the undue hardship exception

Federal student loans — Direct Loans, FFEL loans, and Perkins Loans — cannot be discharged in bankruptcy unless you meet the undue hardship test. This test is intentionally strict. You must show that repaying the loan would prevent you from maintaining a minimal standard of living, that your financial situation is likely to persist for a significant portion of the repayment period, and that you have made a good-faith effort to repay. Courts rarely find undue hardship. In practice, fewer than one percent of bankruptcy filers who attempt this succeed.

Private student loans have different rules depending on the lender and the loan agreement, but most are treated like federal loans and cannot be discharged. Some private lenders have included language that makes their loans dischargeable, but this is uncommon. If you have private student debt, the loan documents themselves determine whether bankruptcy can touch it — not a blanket rule.

If you cannot discharge your student loans, other options exist: income-driven repayment plans, deferment, forbearance, and Public Service Loan Forgiveness for federal loans. These do not require bankruptcy and may be faster and cheaper than filing.

Child support and alimony obligations

Court-ordered child support and spousal support (alimony) are never dischargeable in bankruptcy, whether you file Chapter 7 or Chapter 13. The reasoning is straightforward: these debts support a dependent or former spouse, not the debtor's own consumption. Bankruptcy law treats them as obligations to another person, not a creditor.

If you owe back child support or alimony, bankruptcy will not erase it. However, Chapter 13 bankruptcy (a repayment plan) can help you catch up on arrears over three to five years while you continue to make current payments. This is one of the few situations where Chapter 13 offers a real advantage: it stops wage garnishment and collection actions while you repay through the court.

If you are behind on support, the state child support enforcement agency or your ex-spouse's attorney can still pursue collection after bankruptcy. Arrears can result in license suspension, tax refund offset, and passport denial.

Tax debt and recent income taxes

Income tax debt can sometimes be discharged in bankruptcy, but only if specific conditions are met. The debt must be at least three years old (measured from the original due date of the return, not the date you filed late). You must have filed the return at least two years before filing bankruptcy. The tax must have been assessed at least 240 days before you file. And you cannot have committed fraud or willful evasion.

Recent tax debt — anything filed within the last two years or assessed within the last 240 days — is non-dischargeable. Penalties and interest on non-dischargeable tax debt are also non-dischargeable. Payroll taxes owed by a business owner are treated differently and are often non-dischargeable even if they are old.

If you owe the IRS, the agency can continue collection efforts after bankruptcy: wage levy, bank levy, and lien on property. The IRS does not need a court judgment to collect, which makes tax debt particularly difficult to manage outside of a repayment plan.

Criminal fines, restitution, and court-ordered payments

Any fine imposed by a criminal court — whether for a felony or misdemeanor — cannot be discharged. Restitution ordered as part of a criminal sentence (money paid to a victim) is also non-dischargeable. These debts reflect punishment or compensation ordered by the justice system, not ordinary consumer debt.

Some civil judgments that arise from criminal conduct may also be non-dischargeable. For example, if you were sued for damages resulting from drunk driving, that judgment might survive bankruptcy depending on how the court characterizes it. The distinction turns on whether the debt arose from the criminal act itself or from civil liability for harm caused.

Court-ordered restitution to crime victims is prioritized in bankruptcy. If you file Chapter 13, restitution must be paid in full through your repayment plan before other unsecured creditors receive anything.

Debts from fraud, theft, and willful injury

Debts incurred through fraud — lying on a credit process, using someone else's identity, or obtaining credit through deliberate deception — are non-dischargeable if the creditor objects during bankruptcy. The creditor must file a complaint in the bankruptcy court within a specific important date (usually 60 days after the case is filed) and prove the fraud. If they do, that particular debt survives.

Debts arising from willful and malicious injury to a person or property are also non-dischargeable. If you were ordered to pay damages for intentionally harming someone or destroying their property, that judgment cannot be wiped out. Negligence does not count — only intentional acts. A car accident caused by careless driving is dischargeable; one caused by deliberately ramming another vehicle is not.

Theft and embezzlement debts fall into this category as well. If you stole money and were ordered to repay it, that obligation survives bankruptcy. The same applies to money obtained through false pretenses or breach of fiduciary duty (such as a trustee misusing trust funds).

Government overpayments and benefit recoupment

If you received unemployment benefits, welfare, disability, or other government information that you were not may have access to to, the government can pursue you for repayment. These overpayments are generally non-dischargeable, particularly if they resulted from fraud or misrepresentation on your part. Even if the overpayment was the government's error, some states treat it as non-dischargeable.

The government can offset your tax refunds to recover overpaid benefits. It can also garnish wages and intercept other payments. Bankruptcy does not stop these collection methods for benefit overpayments in most cases.

If you believe an overpayment was made in error or you have a legitimate dispute about the amount, contact the agency that issued the benefit. Some overpayments can be waived if you can show you relied on the payment in good faith and repayment would cause hardship, but this requires a separate request — not part of bankruptcy.

Debts you can discharge and how to identify them

Credit card debt, medical bills, personal loans, payday loans, and most business debts are dischargeable in bankruptcy. Utility bills, rent arrears, and deficiency judgments (the amount owed after a foreclosure or repossession sale) are also dischargeable. Debts incurred for ordinary living expenses or consumer purchases can be wiped out.

The distinction matters because your bankruptcy filing will list all debts — both dischargeable and non-dischargeable. The court will discharge the ones it can, and you remain liable for the rest. A bankruptcy attorney can review your specific debts and tell you which category each one falls into, which helps you decide whether filing makes financial sense.

If you have mostly non-dischargeable debt, alternatives like debt consolidation, income-driven repayment plans, or negotiated settlement may be more effective than bankruptcy. If you have a mix, bankruptcy can eliminate the dischargeable portion while you work out a plan for the rest.

Frequently Asked Questions

Can I discharge a student loan if I'm permanently disabled?

Permanent disability can be grounds for discharge of federal student loans, but it is a separate process from bankruptcy. You must explore for Total and Permanent Disability discharge through your loan servicer. This is faster and cheaper than attempting to prove undue hardship in bankruptcy court. If approved, the loan is forgiven without filing bankruptcy.

What happens if I file bankruptcy and still owe child support after discharge?

The child support obligation remains. The other parent or state child support enforcement can continue collection after your bankruptcy closes. If you file Chapter 13, current and back support must be paid through your repayment plan. If you file Chapter 7, you still owe the debt and can be pursued for collection.

Can old tax debt be discharged even if I didn't file a return?

No. The IRS must have assessed the tax, and you must have filed a return (even if late) at least two years before bankruptcy. If you never filed a return, the debt cannot be discharged. The IRS can also file a substitute return on your behalf, which resets the clock on the time requirements.

If a creditor doesn't object to fraud during bankruptcy, does the debt get discharged?

Yes. The creditor must file a complaint objecting to discharge within the important date set by the court, usually 60 days after your case is filed. If they do not object, the debt is discharged even if fraud occurred. This is why creditors monitor bankruptcy filings — they have limited time to act.

Does bankruptcy stop wage garnishment for non-dischargeable debts?

Bankruptcy stops all collection actions temporarily through the automatic stay. Once your case closes and debts are discharged, creditors can resume collection on non-dischargeable debts. For child support and tax debt, garnishment often resumes quickly. Chapter 13 can prevent garnishment for the duration of your repayment plan if the debt is included in the plan.