Dischargeable Debts in Chapter 7
- Credit card debt
- Medical bills
- Personal loans and payday loans
- Utility arrearages
- Collection accounts
- Deficiency balances (after repo or foreclosure)
- Most civil court judgments
- Past-due rent
- Cell phone and cable bills
- Business debts (for sole proprietors)
- Older income tax debts (meeting the 3/2/240 rule)
Non-Dischargeable Debts
- Child support and alimony
- Most student loans (unless undue hardship proven)
- Recent income taxes (within the 3/2/240 thresholds)
- Debts from fraud, embezzlement, or larceny
- Debts from drunk driving injuries
- Criminal fines and restitution
- Government overpayments (in some cases)
- HOA fees accruing after filing
- Debts you fail to list (in some jurisdictions)
The 3/2/240 Tax Rule
Income taxes can be discharged if all three conditions are met: (1) the tax return was due more than 3 years ago, (2) the tax return was actually filed more than 2 years ago, and (3) the tax was assessed more than 240 days ago. If any condition fails, the tax debt survives the discharge.
Discharge vs. Lien Survival
The discharge eliminates your personal liability -- you no longer owe the money. However, valid liens survive discharge. If a creditor has a lien on your property (mortgage, car loan, judgment lien), the lien remains even though your personal obligation is gone.
This means: if you discharge a mortgage debt but keep the house, the lender can still foreclose. The discharge means you won't owe a deficiency balance if they do.
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Last updated: April 2026. Not legal advice.
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