If you’ve been researching bankruptcy, you’ve probably come across a phrase like “debt discharge” or “wiping out debt.” Sounds promising, right? And it can be, depending on the kind of debt you’re dealing with.
Bankruptcy can be a financial eraser, but it is also a strategic tool for managing overwhelming obligations.
The key is understanding which debts are eligible for discharge and which ones tend to stick around no matter what.
Let’s break it down in a way that’s clear, useful, and yes a little easier to digest than a wall of legal jargon.
What You May Be Able to Discharge
Most people who file for bankruptcy are hoping for relief from everyday consumer debt—and the good news is, that’s exactly where bankruptcy can be most effective.
Here are some of the more commonly discharged debts:
- Credit card balances – One of the top reasons people file. Most unsecured credit card debt can be discharged.
- Medical bills – Whether it’s a single ER visit or years of unpaid treatment, medical debt is often eligible for discharge.
- Personal loans – Including payday loans or installment loans from finance companies.
- Past-due utility bills – Gas, electric, and even some phone bills can be included.
- Old lease obligations – If you owe back rent to a former landlord, that amount may be dischargeable.
In many Chapter 7 and Chapter 13 cases, these debts are eliminated or significantly reduced, giving filers a chance to reset financially.
Debts That Typically Can’t Be Discharged
Of course, some debts are treated differently by the law either due to public policy or legal structure.
Here’s what bankruptcy generally won’t get rid of:
- Child support and alimony – These are court-ordered and protected by law. Bankruptcy won’t change your obligation to pay.
- Most student loans – Discharge is possible, but only in rare cases involving extreme hardship.
- Recent tax debt – Some older income tax debts may qualify, but recent ones usually do not.
- Fraudulent Debts – If you defrauded someone into loaning you money, this debt could survive if that creditor objects
- Criminal fines or restitution – Bankruptcy won’t erase penalties tied to criminal cases or certain court judgments.
Also, if you have secured debts—like a mortgage or a car loan—bankruptcy may not remove the lender’s right to repossess the property. You may still need to make payments if you want to keep it.
Every case is different. While some debts may be wiped out for one person, they may be treated differently for another depending on income, assets, and the type of bankruptcy filed.
What matters most is understanding your options—and that starts with knowing the facts, not the myths.
Thinking About Bankruptcy?
At Farmer & Wright, we understand how stressful and confusing this process can seem. Our team is here to help you make informed, confident decisions about your financial future.
If you’re wondering what kinds of debt you could eliminate—or what protections may apply to your situation—we offer free consultations to help you understand your options, without pressure or commitment.
Because when it comes to debt, knowledge isn’t just power, it’s peace of mind.
At Farmer & Wright, we’ve helped more people in the last five years file for bankruptcy in Kentucky than anyone. If you still have questions, give our office a call . We will be happy to answer your questions.
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