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What can be discharged in a Chapter 7 bankruptcy?

The discharge in a Chapter 7 bankruptcy wipes out many types of debt, including unsecured credit card debt, utility bills, back rent, medical bills, uninsured car accident judgments, amounts owed on repossessed or surrendered vehicles, and various other unsecured debts. The discharge accomplishes this by relieving the debtor of personal liability for these debts and preventing creditors from ever pursuing these debts in the future.

However, there are certain types of debt that won't be discharged in a Chapter 7. These debts include most tax debt, criminal restitution, domestic support obligations such as child support, maintenance, and alimony, most student loans, debts related to drunk driving, and debts incurred by fraud.

Secured debts such as car loans and mortgages can also be discharged in a Chapter 7. This means that if you do not want your car or house you can walk away from these debts in a Chapter 7 bankruptcy. However, valid liens survive the discharge and remain in effect after the bankruptcy. This means secured creditors can still bring actions such as foreclosures and repossessions to enforce valid liens post-bankruptcy. Thus, in order to retain collateral such as a house or a car, Chapter 7 debtors must either reaffirm secured debt or make arrangements to redeem the collateral.

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