Dischargeable Debts: What Both Chapters Eliminate
Both Chapter 7 and Chapter 13 discharge the same categories of unsecured debt: credit card balances, medical bills, personal loans, utility arrearages, old cell phone bills, payday loans, deficiency balances from repossessions or foreclosures, and most money judgments from lawsuits.
The mechanism differs -- Chapter 7 eliminates these debts in 3-4 months, while Chapter 13 may require partial payment over 3-5 years before discharging the remainder -- but the end result is the same: you no longer owe the debt.
Non-Dischargeable Debts: What Survives Both Chapters
Certain debts cannot be eliminated in any bankruptcy: child support and alimony, most student loans (absent a showing of "undue hardship"), criminal fines and restitution, debts from drunk driving accidents, and debts incurred through fraud.
Recent income tax debts are also non-dischargeable, though older tax debts may qualify under specific rules (generally: filed more than 2 years ago, assessed more than 240 days ago, tax return due more than 3 years ago, no fraud involved).
Chapter 13's Broader Discharge
Chapter 13 historically had a broader discharge that eliminated certain debts Chapter 7 could not, including some property settlement debts from divorce, debts from willful damage to non-debtor property, and certain fraud debts. However, the 2005 BAPCPA amendments narrowed this gap significantly.
The most important remaining difference: Chapter 13 can restructure secured debts (like car loans) and cure mortgage arrears. Chapter 7 cannot. This means Chapter 13 is uniquely valuable for saving a home from foreclosure or reducing an underwater car loan.
Student Loans in Bankruptcy
Student loans are notoriously difficult to discharge in bankruptcy, requiring proof of "undue hardship" under the Brunner test (or the looser totality-of-circumstances test used in some circuits). This applies to both chapters.
However, Chapter 13 may help manage student loans: the automatic stay stops collection, payments through the plan count as partial repayment, and some courts have begun allowing partial discharges. The DOJ's 2022 guidance also created a new attestation process that has made discharge slightly more accessible.
For a complete guide, see bankruptcystudentloans.org.
Tax Debts
Income tax debts can be discharged if they meet all of these conditions: (1) the tax return was due more than 3 years ago, (2) the return was actually filed more than 2 years ago, (3) the tax was assessed more than 240 days ago, and (4) there was no fraud or willful evasion.
In Chapter 7, qualifying tax debts are discharged immediately. In Chapter 13, you must pay non-dischargeable tax debts in full through the plan (they are "priority" debts), but qualifying tax debts can be treated as general unsecured claims.
Secured Debts: Cars and Mortgages
Neither chapter eliminates your obligation to pay secured debts if you want to keep the collateral. In Chapter 7, you choose to reaffirm (keep paying), redeem (pay current value in lump sum), or surrender the property. In Chapter 13, secured debts are paid through the plan.
Chapter 13 advantage: The "cramdown" provision allows you to reduce a car loan to the vehicle's current market value if the loan is more than 910 days old. A $15,000 loan on a car worth $8,000 can be crammed down to $8,000.
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Last updated: April 2026. Not legal advice.
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