Debt Types Covered
- How Debt Type Affects Bankruptcy
- Medical Debt -- Generally dischargeable
- Student Loans -- Requires undue hardship showing
- Tax Debt -- Some taxes are dischargeable
- Credit Card Debt -- Generally dischargeable
- Payday Loans -- Generally dischargeable
- EIDL / SBA Loans -- Government-backed business debt
How Debt Type Affects Your Bankruptcy
The Bankruptcy Code divides debts into categories that determine whether they can be eliminated (discharged) through bankruptcy. Unsecured debts like medical bills and credit cards are generally dischargeable. Certain debts like recent taxes, student loans, and domestic support obligations receive special treatment and may survive bankruptcy.
Understanding which of your debts are dischargeable helps you evaluate whether bankruptcy will actually solve your financial problems. If most of your debt is non-dischargeable, bankruptcy may not be the right tool -- or you may need a different strategy within bankruptcy to address those debts.
Medical Debt
Medical Debt and Bankruptcy
Medical debt is the leading cause of consumer bankruptcy filings in the United States. It is classified as general unsecured debt and is fully dischargeable in both Chapter 7 and Chapter 13. This guide covers how medical debt is treated in bankruptcy, the impact of recent changes to credit reporting rules, alternatives to bankruptcy for medical debt, and how to handle debt collectors during and after your case.
Student Loans
Student Loans in Bankruptcy
Student loans are not automatically discharged in bankruptcy -- you must file a separate adversary proceeding and prove "undue hardship" under the Brunner test or totality-of-circumstances test, depending on your circuit. This guide explains the legal standards, recent DOJ guidance that has made discharge easier in some cases, income-driven repayment alternatives, and how to evaluate whether an adversary proceeding is worth pursuing in your situation.
Tax Debt
Tax Debt in Bankruptcy
Whether tax debt survives bankruptcy depends on several factors: the type of tax, when the return was due, when it was filed, and whether the IRS has assessed the tax. Income taxes can be dischargeable if they meet the "3-2-240" rule (due more than 3 years ago, filed more than 2 years ago, assessed more than 240 days ago). This guide walks through the rules for federal and state taxes, priority vs. non-priority tax claims, and how Chapter 13 can help you pay non-dischargeable tax debt over time.
Credit Card Debt
Credit Card Debt in Bankruptcy
Credit card debt is general unsecured debt and is fully dischargeable in bankruptcy. However, there are exceptions: charges for luxury goods over $800 made within 90 days of filing, and cash advances over $1,100 within 70 days of filing, are presumed non-dischargeable. This guide covers how credit card debt is treated in both chapters, how to avoid fraud objections, the impact of balance transfers, and what happens to store credit cards and rewards points.
Payday Loans
Payday Loan Debt in Bankruptcy
Payday loans, title loans, and other high-interest short-term debt are dischargeable in bankruptcy. Despite aggressive collection tactics, payday lenders have the same legal standing as any other unsecured creditor. This guide addresses common scare tactics used by payday lenders, how the automatic stay stops payday loan collections, what happens to post-dated checks or ACH authorizations, and how to deal with multiple overlapping payday loans.
EIDL / SBA Loans
EIDL Loans and Bankruptcy
Economic Injury Disaster Loans (EIDL) issued by the SBA during COVID-19 created a wave of business debt that many borrowers cannot repay. EIDL loans are dischargeable in personal bankruptcy, but the SBA's security interest in business assets and the personal guarantee structure complicate the analysis. This guide covers the difference between EIDL loans and EIDL advances, how personal guarantees work in bankruptcy, SBA collection procedures, and the best chapter for EIDL borrowers based on their business structure.
Wondering if you are eligible for a bankruptcy discharge?
Our free screening tool checks your filing history against federal discharge bars.
Related Resource Hubs
- How to File Bankruptcy -- Step-by-step filing guides
- Protecting Your Assets -- Keep your car, home, and property
- Life After Bankruptcy -- Rebuilding credit and moving forward
- Is Your Bankruptcy Lawyer Doing a Good Job? -- Evaluate your attorney