There are many reasons to file for Chapter 7 bankruptcy, including the ability to discharge debt. By doing so, you’re able to eliminate some of the bills that are weighing you down, thus giving you a fresh financial start.

However, it’s important to understand that you can’t discharge all your debts in Chapter 7 bankruptcy. Here is a list of the debts that typically cannot be discharged:

  • Any debts not listed on the schedules filed at the beginning of your case
  • Student loan debt
  • Local, state and federal taxes
  • Spousal support
  • Child support
  • Government imposed penalties
  • Court fees
  • Debts associated with certain types of pension plans
  • Debts associated with a personal injury or wrongful death lawsuit
  • Debts that were not dischargeable in a previous bankruptcy filing

What about student loans?

As noted above, student loan debt is not typically discharged in Chapter 7 bankruptcy. However, depending on the circumstances, you may be able to discharge some or all of this debt. The court will consider the following:

  • Income: If you’re forced to continue paying on your student loans, will it hinder your ability to maintain a minimum standard of living?
  • Duration: If the court expects your lack of financial resources, as it relates to your income, to last into the future.
  • Good faith: Did you attempt to stay current with your student loan debt prior to bankruptcy?

As you move closer to a Chapter 7 bankruptcy filing, make note of the debts you can discharge as well as those that will remain in place. This will help you better manage your finances now, while also making more informed decisions about your future budget.