What Debts Are Discharged in Personal Bankruptcy? A New York Bankruptcy Attorney Explains
Reviewed for legal accuracy: October 2026
One of the most important questions people ask before filing for bankruptcy is: What debts does personal bankruptcy discharge?
In short, personal bankruptcy can eliminate many unsecured debts, including credit card balances, medical bills, personal loans, and certain collection judgments. However, not every obligation qualifies for discharge. You may still be responsible for child support, alimony, certain taxes, most student loans, and several other debt categories.
The debts you can discharge also depend on whether you file under Chapter 7 or Chapter 13 of the U.S. Bankruptcy Code.
For individuals and families in New York City, Nassau County, and Suffolk County, understanding these differences is essential before deciding whether bankruptcy is appropriate.
At Kamini Fox Law, we help New Yorkers understand their bankruptcy options, evaluate their financial obligations, and determine how federal bankruptcy law applies to their circumstances.
What Does It Mean When a Debt Is Discharged in Bankruptcy?
A bankruptcy discharge is a federal court order that eliminates your personal legal obligation to repay certain qualifying debts.
Once a debt has been discharged, creditors generally cannot:
Contact you demanding repayment of that discharged debt.
File a new lawsuit to collect the discharged obligation.
Continue an existing collection lawsuit to recover the discharged debt from you personally.
Garnish your wages to collect a discharged debt.
Take other collection actions against you personally for that discharged obligation.
This protection is established under 11 U.S.C. § 524, which governs the legal effect of a bankruptcy discharge.
Important: A discharge eliminates personal liability for qualifying debts, but it does not necessarily remove a valid lien against property. For example, bankruptcy generally does not eliminate a mortgage lender's lien on your home.
This distinction matters for New York homeowners considering bankruptcy.
What Debts Can Be Discharged in Personal Bankruptcy?
Most ordinary unsecured debts incurred before you file for bankruptcy are potentially dischargeable.
An unsecured debt is an obligation that is not backed by specific collateral, such as a home or vehicle.
The following are among the most common debts eliminated through personal bankruptcy.
1. Credit Card Debt
Credit card balances are generally dischargeable in both Chapter 7 and Chapter 13 bankruptcy.
Examples include:
Major credit card balances.
Retail store credit cards.
Unsecured lines of credit.
Accumulated interest and late fees.
Collection accounts associated with credit cards.
For example, someone with $35,000 in ordinary credit card balances may be able to eliminate personal liability through a Chapter 7 discharge if they qualify and no applicable exception prevents discharge.
However, courts may treat charges obtained through fraud differently. Certain recent luxury purchases and cash advances can also trigger statutory presumptions of nondischargeability.
2. Medical Bills
Medical debt is generally dischargeable through personal bankruptcy.
This may include unpaid bills from:
Hospital visits and emergency care.
Surgery and medical procedures.
Physician and specialist appointments.
Diagnostic testing.
Ambulance services.
Dental treatment.
Other qualifying medical services.
Medical debt is generally considered unsecured unless unusual circumstances create enforceable security or other rights.
For people facing significant medical expenses, Chapter 7 bankruptcy may eliminate eligible outstanding medical bills without requiring ongoing repayment.
3. Personal Loans
Most unsecured personal loans are dischargeable.
Common examples include unsecured bank loans, credit union loans, and loans from online lenders.
Money borrowed from friends or family may also be dischargeable. The fact that the lender is a relative does not automatically make the debt exempt from bankruptcy.
However, special circumstances involving fraud, collateral, or other legal obligations may affect the outcome.
You should properly disclose all creditors, including individuals who lent you money personally, in your bankruptcy filing.
4. Collection Accounts and Certain Judgments
Many people assume that once a creditor obtains a court judgment, the underlying debt can no longer be discharged.
That is not necessarily true.
If a judgment arises from an ordinary dischargeable obligation, such as an unpaid credit card account or personal loan, bankruptcy may eliminate your personal liability for the judgment.
However, certain judgments involving fraud, intentional misconduct, or other nondischargeable obligations may survive bankruptcy.
A judgment lien against real estate may also require separate legal analysis.
For New York homeowners, this distinction can matter when determining whether a bankruptcy filing can address a judgment while protecting home equity.
5. Past-Due Utility Bills
Certain utility balances incurred before bankruptcy may be discharged.
These may include unpaid electricity, gas, water, and other utility charges.
However, special rules apply to utility providers during bankruptcy, and a utility may be entitled to request adequate assurance of future payment.
In addition, charges connected to property liens or municipal obligations may require separate examination.
6. Past-Due Rent and Lease Obligations
Unpaid residential rent incurred before filing bankruptcy is often treated as an unsecured debt and may be discharged.
For example, a former tenant who owes rent under a terminated lease may be able to discharge that financial obligation.
However, bankruptcy does not automatically restore a terminated lease or permanently prevent eviction.
The outcome depends on whether the landlord has already obtained a judgment for possession, the stage of the eviction proceeding, and applicable bankruptcy and New York law.
7. Certain Business-Related Debts
Individuals sometimes incur personal financial obligations while operating a small business.
If the individual files for personal bankruptcy, certain business-related liabilities may be dischargeable, including:
Unsecured business credit card balances for which the individual is personally liable.
Personal guarantees on qualifying business loans.
Certain outstanding vendor obligations.
Certain business-related judgments.
However, a personal guarantee does not automatically determine dischargeability.
Liabilities involving fraud, fiduciary misconduct, taxes, or valid security interests can require additional analysis.
This is especially relevant for New York entrepreneurs and small business owners who may have personal obligations connected to their companies.
What Debts Cannot Be Discharged in Personal Bankruptcy?
Although bankruptcy can eliminate many financial obligations, federal law excludes specific categories.
These exceptions are principally addressed in 11 U.S.C. § 523.
Student Loans
Most federal and private educational loans are not automatically discharged in bankruptcy.
However, student loans may be discharged in qualifying circumstances, generally when repayment would impose an undue hardship.
The process frequently requires an adversary proceeding in bankruptcy court.
Federal student loan borrowers may also benefit from procedures developed by the U.S. Department of Justice and the Department of Education to help evaluate undue hardship discharge requests.
Student loans are not categorically impossible to discharge. Eligibility depends on the particular obligation, applicable legal standards, and the borrower's circumstances.
Child Support and Alimony
Domestic support obligations, including qualifying child support and alimony, generally cannot be discharged in either Chapter 7 or Chapter 13 bankruptcy.
Bankruptcy also does not eliminate the obligation to continue paying legally required future support.
Past-due domestic support obligations generally remain enforceable following discharge.
Certain Tax Debts
Some older income tax obligations may qualify for discharge if specific statutory conditions are satisfied.
The analysis may involve:
When the tax return was due.
When the return was actually filed.
When the tax was assessed.
Whether the taxpayer committed fraud or willfully attempted to evade taxes.
Whether bankruptcy or other proceedings affected the applicable time periods.
Recent income taxes, certain trust fund taxes, and various other tax liabilities are generally not dischargeable.
Tax discharge analysis is complex and should be completed before filing, especially when a person owes both federal and New York State taxes.
Criminal Fines and Restitution
Many criminal fines, penalties, and restitution obligations are nondischargeable.
The precise treatment depends on the obligation and bankruptcy chapter.
Debts Resulting From Fraud or Certain Misconduct
A debt arising from fraudulent conduct may be declared nondischargeable.
Examples may include:
Money obtained through material false representations.
Certain fraudulent financial transactions.
Fraud or defalcation while acting in a fiduciary capacity.
Embezzlement or larceny.
Certain intentional injuries to people or property.
Not every fraud accusation automatically prevents discharge.
For certain categories, a creditor must file a timely bankruptcy court proceeding and establish grounds for nondischargeability.
Debts Involving Injuries Caused by Intoxicated Driving
Certain debts arising from death or personal injury caused by operating a motor vehicle while intoxicated are generally not dischargeable.
Federal bankruptcy law treats these obligations specially.
Chapter 7 vs. Chapter 13: Which Debts Are Discharged?
Both Chapter 7 and Chapter 13 can discharge common unsecured debts, but they use different procedures and offer different protections.
Feature | Chapter 7 Bankruptcy | Chapter 13 Bankruptcy |
Credit card debt | Generally dischargeable | Remaining eligible balance generally discharged after plan completion |
Medical bills | Generally dischargeable | Eligible unpaid balance generally discharged |
Unsecured personal loans | Generally dischargeable | Eligible unpaid balance generally discharged |
Most student loans | Generally not discharged without applicable legal grounds | Same general rule |
Child support and alimony | Not dischargeable | Not dischargeable |
Certain income tax debts | May qualify | May qualify, depending on tax type and circumstances |
Mortgage debt | Personal liability may be discharged, but liens generally survive | Can provide a way to address mortgage arrears through a plan |
Timing of discharge | Often within several months | Generally after completing a three-to-five-year repayment plan |
Chapter 7 Bankruptcy Discharge
Chapter 7 bankruptcy generally discharges qualifying obligations without requiring a multi-year repayment plan.
An individual must satisfy applicable eligibility requirements, including the means test when relevant.
In a Chapter 7 case, a trustee may sell nonexempt property to pay creditors. Many individual cases involve no nonexempt assets available for distribution.
People primarily dealing with credit card balances, medical bills, and unsecured personal loans may want to consider Chapter 7.
Learn more about working with a Chapter 7 bankruptcy attorney.
Chapter 13 Bankruptcy Discharge
Chapter 13 allows eligible individuals with regular income to propose a court-approved repayment plan, generally lasting three to five years.
Instead of an immediate discharge, a debtor typically receives one after successfully completing the required plan payments and meeting other legal conditions.
Chapter 13 can help when someone needs to address mortgage arrears, protect assets, or manage obligations that Chapter 7 may not address effectively.
A completed Chapter 13 plan can also discharge certain debts that Chapter 7 may not discharge, although important statutory exceptions remain.
A Chapter 13 bankruptcy attorney can help you evaluate your options.
For additional guidance, read our article on Chapter 7 vs. Chapter 13 bankruptcy in New York.
Can Bankruptcy Eliminate Mortgage or Car Loan Debt?
Secured debts require special consideration.
A secured debt is backed by property that the creditor may legally repossess or foreclose on if the borrower defaults.
Common secured debts include residential mortgages and automobile loans.
A bankruptcy discharge may eliminate personal liability for an eligible secured obligation, but it generally does not automatically eliminate the creditor's valid lien.
For example:
Mortgage: A Chapter 7 discharge may eliminate a homeowner's personal liability for the mortgage note, but the mortgage lien generally survives. The lender may still have foreclosure rights if the obligation goes unpaid.
Car loan: A debtor may be able to surrender the vehicle and discharge qualifying personal liability. Alternatively, keeping the vehicle may involve continuing payments, reaffirming the debt when legally appropriate, or pursuing other applicable options.
In Chapter 13, a repayment plan may offer additional tools to address secured debts.
New York homeowners should carefully evaluate how bankruptcy interacts with their mortgage obligations, home equity, available exemptions, and foreclosure risks.
Does Bankruptcy Discharge All Debts Automatically?
No. Filing bankruptcy and receiving a bankruptcy discharge are two different events.
When a bankruptcy petition is filed, an automatic stay generally takes effect under 11 U.S.C. § 362.
The stay temporarily restricts many creditor collection activities, subject to statutory exceptions and court orders.
A discharge typically occurs later in the case.
The discharge determines which qualifying debts the debtor no longer must repay.
To obtain a discharge, individuals must comply with applicable requirements, which may include submitting accurate bankruptcy schedules, completing required debtor education, attending the meeting of creditors, and satisfying other court requirements.
A bankruptcy filing does not guarantee that every listed obligation will be discharged or that a court will grant a discharge in every case.
How Does Personal Bankruptcy Work in New York?
Federal law governs personal bankruptcy, but New York law can affect key aspects of a case.
For individuals in Nassau County, Suffolk County, Brooklyn, Queens, Manhattan, and other parts of New York City, several factors deserve consideration.
New York Bankruptcy Exemptions
Exemptions determine which property a debtor can protect from a Chapter 7 trustee.
Depending on eligibility and circumstances, New York residents may choose between federal bankruptcy exemptions and New York exemption provisions.
Available protections can affect:
Home equity.
Personal belongings.
Vehicles.
Retirement accounts.
Certain financial assets.
You must carefully evaluate the applicable exemption system, dollar limits, residency requirements, and property ownership details.
Bankruptcy Court Jurisdiction
Bankruptcy cases for Nassau County and Suffolk County are generally filed in the U.S. Bankruptcy Court for the Eastern District of New York.
Cases involving Manhattan are generally filed in the Southern District of New York.
The appropriate district depends on applicable venue rules.
Individual Circumstances Matter
Two people with similar debt levels may receive very different legal recommendations.
For example, a Long Island homeowner with mortgage arrears and substantial home equity may face considerations very different from those of a renter in Queens with unsecured credit card and medical debt.
That is why an individualized assessment matters before choosing a bankruptcy chapter.
What Happens If a Creditor Tries to Collect a Discharged Debt?
Once a qualifying debt is discharged, the discharge injunction generally prohibits creditors from pursuing personal collection of that obligation.
If a creditor continues trying to collect a discharged debt, consider taking the following steps:
Keep copies of letters, account statements, emails, and collection notices.
Retain your bankruptcy discharge order and case number.
Don't assume every post-bankruptcy collection demand is unlawful, since the debt may fall within a discharge exception.
Contact a bankruptcy attorney to determine whether the creditor's actions violate the discharge injunction.
Depending on the circumstances, the bankruptcy court may have authority to address violations of its discharge order.
Frequently Asked Questions About Discharged Debts
What debts are usually wiped out in bankruptcy?
Common dischargeable debts include credit cards, medical bills, unsecured personal loans, certain utility bills, old rent obligations, and judgments based on dischargeable claims. Exceptions apply in certain situations.
Can bankruptcy eliminate $50,000 in credit card debt?
Potentially, yes. No general rule prevents discharging $50,000 in ordinary unsecured credit card debt in bankruptcy. Eligibility, the bankruptcy chapter, fraud-related exceptions, and other circumstances affect the outcome.
Can personal loans be discharged in Chapter 7?
Generally, Chapter 7 can discharge unsecured personal loans unless a specific legal exception applies.
Are student loans ever discharged in bankruptcy?
Yes, in qualifying circumstances. Certain educational debts may be discharged if the debtor meets applicable legal standards, including, where relevant, undue hardship requirements. Additional legal proceedings are often necessary.
Does bankruptcy eliminate old tax debt?
Some older income tax liabilities may qualify, but tax discharge rules are complicated. The filing date, assessment date, return history, type of tax, and other circumstances determine whether a particular obligation qualifies.
Do debts disappear immediately after filing bankruptcy?
No. Filing generally triggers the automatic stay, while discharge usually occurs later. The filing itself does not eliminate personal liability for qualifying debts.
Can a creditor collect a discharged debt after bankruptcy?
Creditors generally cannot pursue personal collection of debts covered by the discharge injunction. However, creditors may still collect nondischargeable debts and enforce certain surviving liens.
Does Chapter 13 discharge more debts than Chapter 7?
In some circumstances, yes. A standard Chapter 13 discharge after plan completion can cover certain obligations that Chapter 7 cannot discharge. Exceptions and requirements depend on your circumstances, and a Chapter 13 hardship discharge has a narrower scope.
Speak With a New York Bankruptcy Attorney About Which Debts May Be Discharged
Understanding which debts you can discharge is an important first step, but determining how bankruptcy applies to your financial situation requires a closer review of your obligations, assets, income, and goals.
At Kamini Fox Law, we represent individuals and businesses in bankruptcy matters throughout New York City and Long Island, including Nassau County and Suffolk County.
Whether you are considering Chapter 7, exploring Chapter 13, or facing more complex bankruptcy questions, our firm can help you understand your legal options under federal bankruptcy law.
Schedule a consultation with Kamini Fox Law to discuss your bankruptcy options and determine which financial obligations may qualify for discharge.
