Filing for bankruptcy is often seen as a fresh start for people struggling with overwhelming debt. But many Kansas City residents are surprised to learn that not all debts can be eliminated through bankruptcy. Knowing what debts can and cannot be discharged is key to setting realistic expectations and creating a strategy that works for your financial future.
At Castle Law Office, we’ve guided thousands of Kansas Citians through the bankruptcy process. Here’s a breakdown of how different types of debts are handled:
Debts That Can Usually Be Wiped Out
In both Chapter 7 and Chapter 13 bankruptcy, many common consumer debts can be discharged, including:
- Credit Card Debt – This is one of the most common forms of dischargeable debt. High interest rates and penalties can spiral out of control, but bankruptcy offers relief.
- Medical Bills – Whether from a major surgery or ongoing treatment, medical debt is often fully dischargeable.
- Personal Loans – Most unsecured loans from banks, payday lenders, or individuals can be wiped out.
- Utility Bills – Past-due balances for electricity, water, or gas can be included in your bankruptcy.
- Old Lease Obligations – If you broke a lease or owe rent from before filing, those debts are often dischargeable.
These types of debt are considered unsecured, meaning they aren’t tied to collateral like a car or house.
Debts That Usually Cannot Be Wiped Out
Some debts are protected under federal law and typically survive bankruptcy. These include:
- Student Loans – Most student loans are not dischargeable unless you can prove “undue hardship,” which is a very high legal standard.
- Child Support and Alimony – Family-related obligations remain enforceable after bankruptcy.
- Certain Taxes – While some older tax debts may be discharged, most recent federal, state, and local tax obligations cannot be.
- Debts From Fraud or Misconduct – If a creditor proves you obtained money by fraud or caused injury while intoxicated (such as in a DUI accident), those debts will survive bankruptcy.
- Fines and Penalties to Government Agencies – Court fines, criminal restitution, and certain penalties remain your responsibility.
Special Considerations
- Secured Debts (like mortgages or car loans) – Bankruptcy may eliminate your personal liability for the debt, but the lender still has the right to repossess or foreclose on the property unless you keep making payments.
- Chapter 13 Advantage – In Chapter 13, some debts that aren’t dischargeable in Chapter 7 may be restructured, giving you time to catch up and keep important assets.
Take the Next Step Toward Relief
Bankruptcy can offer life-changing relief, but understanding what debts are and aren’t dischargeable is critical before filing. Every case is unique, and the right strategy depends on your personal circumstances.
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