8 Exceptions When Filing Chapter 7 Bankruptcy

When you’re going through a financial crisis and facing a plummeting credit score, sometimes bankruptcy is the best or only solution. Certain unforeseen events, like divorce, catastrophic illness, or a business failure, can bring with them insurmountable debts that you don’t have the means to pay back, making bankruptcy a valid option for debt relief.

But while many debts can be discharged when you file bankruptcy, some debts cannot be gotten rid of so easily. Let’s look at how bankruptcy works and what debts are not eligible for discharge.

At a glance:

Some debts, such as tax obligations, child support, student loans, criminal debts, and certain property liens, cannot be discharged in bankruptcy.

Before filing for bankruptcy, ensure debts are in your name, consider credit counseling, don’t take on new debts, and be aware of potential consequences for hiding assets.

How does the bankruptcy process work?

When people talk about bankruptcy, they usually mean filing under Chapter 7 or Chapter 13 of the bankruptcy code. The main difference between the two is what happens to your assets and who qualifies for each.

In this article, we will focus on eight types of debt that can’t be discharged in Chapter 7 bankruptcy law, but we have provided some information about Chapter 13 bankruptcy below.

Chapter 7 bankruptcy

This type of bankruptcy focuses on liquidation — you must sell any nonexempt assets to pay off your debts (though specific exemptions may allow you to keep certain property).

How to qualify

To qualify for this kind of bankruptcy, your income must be below the median for a household of your size in your state. If your household income exceeds your state’s median, you must pass a means test to qualify, which considers your income, expenses, and family size to determine if you can reasonably repay your debt.

Chapter 13 bankruptcy

This type of bankruptcy works more like a payment plan, in which you must pay off your debt in three to five years, but you can keep your property — it can even stop a foreclosure through an automatic stay.

How to qualify

To qualify, you must prove to the bankruptcy court that you have enough income left over after necessary expenses to meet your repayment plan obligations.

What debts cannot be discharged in bankruptcy?

There are some nondischargeable debts to keep in mind if you’re considering filing for bankruptcy. Most nondischargeable debts are classified as “priority unsecured debts.” Unlike secured debt, unsecured debt is debt without collateral, and priority unsecured debts cannot be discharged in bankruptcy. In contrast, non-priority unsecured consumer debt — like medical bills, credit card debt, or personal loans — will most likely be discharged in bankruptcy.

Here is a list of nondischargeable debts to keep in mind.

1. Tax debt

Certain kinds of tax debts cannot be discharged in bankruptcy. This generally includes income taxes, Social Security taxes, and IRS penalties you owe, as well as any unpaid withholding taxes for your employees.

Although most back taxes cannot be discharged in bankruptcy, you may be able to have taxes discharged if they are for an income tax return due three or more years ago and you meet certain other qualifications. If you owe significant back taxes you cannot pay in a reasonable period of time, you may want to ask a tax attorney, bankruptcy attorney, or other professional about an Offer in Compromise (OIC) or other alternatives.

2. Child support and alimony

If you owe money for spousal or child support or alimony, you can’t discharge those debts when you file for Chapter 7 bankruptcy. You’ll still be legally obligated to pay these debts once your bankruptcy case is closed.

3. Student loans

Most personal loans can be discharged through bankruptcy, but student loans are more difficult to discharge. You typically can’t discharge your student loan debt through bankruptcy — at least not right after you graduate or stop attending school.

However, if the student loans cause you an undue hardship in the court’s view, you may be able to have them discharged. To do this, you generally must show that you cannot afford to pay the student loans now or for a significant portion of the loan repayment period and that you have made a good-faith effort to repay the loans. The courts under which you file may use other tests and criteria to make a final decision, so it is often wise to consult a bankruptcy lawyer.

4. Home mortgage and other property liens

If you have a lien on a property, such as a home mortgage, you cannot have the mortgage discharged in bankruptcy. State laws vary, but you can generally keep your home when filing for bankruptcy if you keep making the payments and do not have more equity in the home than you are allowed to keep by state law.

5. Debts from criminal or malicious conduct

Debts arising from criminal or malicious acts cannot be discharged in bankruptcy, including penalties and judgments awarded to victims. This includes offenses such as fraud, embezzlement, larceny, or even debts for death or malicious personal injury due to driving under the influence of alcohol or other substances.

6. Your car loan, if you want to keep your car

When you file for bankruptcy, you can “reaffirm” your car loan, which is secured by your car. This means that if you agree to repay all or part of your loan, the lender won’t take your vehicle through repossession. However, you must make payments under the reaffirmed car loan, as required by bankruptcy rules.

7. Debt that doesn’t belong to you

Be sure the debt is in your name before you file for bankruptcy to get rid of it. It might sound strange, but it’s happened before — people have filed for bankruptcy only to discover the debt actually belonged to an ex-spouse or other person, and they were never responsible for it in the first place.

8. New credit card debt

It may be tempting, but don’t go on one last spending spree before you file for bankruptcy. The courts often frown on recent charges made right before filing for bankruptcy, and you don’t want that to stand in the way of any bankruptcy discharge you might be counting on.

FAQs

Do the courts ever deny a Chapter 7 bankruptcy?

Yes, the courts can decide to deny a Chapter 7 bankruptcy. Most individuals typically receive a discharge under Chapter 7 if they qualify. However, if the courts find that you concealed money or other assets, fraudulently transferred assets that should have been used to pay off debts, or otherwise broke the law, the entire bankruptcy case may be denied.

What does nondischargeable debt mean?

A nondischargeable debt is a debt that bankruptcy does not erase. Even after your bankruptcy case is complete, you’re still legally responsible for paying it. Common examples include child support, certain tax debts, and most student loans.

Can tax debt ever be discharged in bankruptcy?

Sometimes, but only under specific conditions. To qualify, your tax debt typically must be for income taxes (not payroll or fraud-related taxes), at least 3 years old, and properly filed with the IRS.

Are student loans always excluded from bankruptcy?

Not always. You may be able to discharge student loans if you can prove they are causing undue hardship, which means you can’t maintain a basic standard of living while repaying the loans. Courts often use strict tests to evaluate this, so it’s often best to consult a bankruptcy lawyer if you want to go this route.

What happens to secured debt in bankruptcy?

Secured debt is backed by collateral, such as a house or a car. Bankruptcy doesn’t automatically erase your obligation to that collateral, so if you want to keep the asset, you usually need to keep making payments. If you stop paying, the lender can repossess or foreclose, even after bankruptcy.

Can I keep my house or car after filing for bankruptcy?

Yes, in many cases you can, but it depends on your situation:

• You must stay current on payments.• Your equity (the portion you own outright) must fall within your state’s exemption limits.• You may need to reaffirm the loan (agree to keep paying it).

If those conditions aren’t met, the asset could be sold to repay creditors.

Does bankruptcy clear all credit card debt?

Most credit card debt is considered non-priority unsecured debt, meaning it’s typically dischargeable. However, recent charges (especially luxury purchases or cash advances made shortly before filing) may not be forgiven if the court believes you didn’t intend to repay them.

What is a “means test” for Chapter 7 bankruptcy?

The means test determines whether your income is low enough to qualify for Chapter 7. It compares your income to the median income in your state for a household of your size. If you earn more than the median, the test examines your expenses to determine whether you can realistically repay your debts.

Will bankruptcy stop collection actions right away?

Yes. Filing for bankruptcy triggers an automatic stay, which is a legal order that temporarily stops most collection efforts, including collection calls, wage garnishments, and foreclosures (at least temporarily). However, some actions (like child support collection) can continue.

Should I talk to a professional before filing for bankruptcy?

It’s a smart move to consult a professional when you file for bankruptcy, as the process involves legal and financial decisions that can affect you for years. A bankruptcy attorney or financial professional can help you understand which debts you can discharge, avoid mistakes that could delay or deny your case, or explore alternatives to bankruptcy if they make more sense for your situation.

The bottom line

Filing for bankruptcy can offer a fresh start, but it’s not a one-size-fits-all solution, and it won’t wipe out every type of debt. Obligations like child support, certain tax debts, and student loans may stick around long after your case is closed, so it’s important to understand exactly what bankruptcy can and can’t do before you file. If you’re feeling unsure, a qualified professional can help you weigh your options and avoid costly missteps.

This article is for informational purposes only and not legal or financial advice.

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Citations

United States Courts. “Chapter 7 – Bankruptcy Basics.” United States Courts, www.uscourts.gov/court-programs/bankruptcy/bankruptcy-basics/chapter-7-bankruptcy-basics.United States Courts. “Chapter 13 – Bankruptcy Basics.” United States Courts, www.uscourts.gov/court-programs/bankruptcy/bankruptcy-basics/chapter-13-bankruptcy-basics.Internal Revenue Service. “Offer in Compromise.” IRS, 22 May 2025, www.irs.gov/payments/offer-in-compromise.Ponder, Meghen. “Guide to Social Security Taxes.” TaxAct Blog, 21 May 2026.Ponder, Meghen. “How IRS Penalties and Interest Work.” TaxAct Blog, 2 June 2026.Ponder, Meghen. “How Much of My Mortgage Payment is Tax Deductible?.” TaxAct Blog, 24 Feb. 2026.