Does a Chapter 7 Bankruptcy Get Rid of All Your Debts?

 Posted on April 20, 2026 in Bankruptcy

Chapter 7 bankruptcy gets rid of many debts, but not all of them. It is one of the most powerful tools available to people overwhelmed by debt. For the right person, it can wipe out tens of thousands of dollars in what they owe. However, certain types of debt survive a Chapter 7 discharge no matter what, and knowing the difference before you file is important.

According to a study published by the American Bankruptcy Institute, more than 62 percent of U.S. bankruptcies are caused by medical debt, making it one of the most common reasons people turn to Chapter 7 for relief. Medical bills are also one of the debts that Chapter 7 can eliminate entirely. If you are planning to file for bankruptcy in 2026, our Naperville, IL bankruptcy lawyer can walk you through exactly what would and would not be eliminated in your case.

What Debts Does a Chapter 7 Actually Eliminate?

The debts that Chapter 7 wipes out are called dischargeable debts. These are the ones that go away permanently once your case is complete and the court issues a discharge order. Common examples include:

• Credit card balances

• Medical bills

• Personal loans

• Utility bills

• Past-due rent in some situations

• Certain older income tax debts that meet specific requirements

• Deficiency balances after a repossession or foreclosure

For most people, these are exactly the kinds of debts that have piled up and become unmanageable. A successful Chapter 7 discharge means creditors can no longer call you, sue you, or try to collect on those balances ever again.

What Debts Does a Chapter 7 Not Eliminate?

Under 11 U.S.C. § 523, there is a specific list of debts that cannot be discharged in a Chapter 7 bankruptcy. These include:

• Student loans, in almost all cases

• Child support and alimony

• Most income tax debts from recent years

• Debts from fraud or intentional wrongdoing

• Criminal fines and restitution orders

• Debts from a DUI that caused injury or death

These debts survive the bankruptcy process completely. That means after your case is over, you still owe them in full, and collection efforts can continue. If a large portion of what you owe falls into these categories, Chapter 7 may not give you the relief you are hoping for, and a different approach may make more sense.

What Happens to Secured Debts Like a Mortgage or Car Loan During a Chapter 7?

Secured debts are a little different from unsecured ones like credit cards. A secured debt is tied to a piece of property, such as your house or your car. Chapter 7 can eliminate your personal obligation to pay a secured debt, but it does not make the lender's lien on the property disappear. In plain terms, if you stop paying your mortgage, the bank can still foreclose even after a bankruptcy discharge.

If you want to keep a secured asset like a car or a home, you generally have two options. You can reaffirm the debt, which means agreeing to stay personally responsible for it and keep making payments. Another possibility in some cases is to redeem the property by paying the lender its current value in a lump sum. An attorney can help you think through which option makes the most sense for your situation.

Can Any Non-Dischargeable Debts Be Wiped Out With a Chapter 7?

Student loans are the most common example of a debt people wish they could discharge. For a long time, discharging student loans in bankruptcy was considered nearly impossible. That has started to shift.

In recent years, the Department of Justice and Department of Education issued new guidance making it somewhat easier to argue for a student loan discharge based on undue hardship. Some bankruptcy courts are applying that standard more generously than before, though it is still a difficult case to make.

Other non-dischargeable debts, like recent tax debts, can sometimes be reduced or managed through installment agreements or offers in compromise outside of bankruptcy. An attorney can help you look at every angle.

What Is the Difference Between Dismissal and Discharge in a Chapter 7?

A discharge is what you want. It means the court has formally eliminated your eligible debts, and you are no longer legally obligated to pay them. A dismissal means your case was thrown out, usually because of a procedural problem or failure to meet a requirement, and your debts remain fully intact. Understanding this distinction matters because a dismissed case does not give you any of the relief you were looking for.

Schedule a Free Consultation With Our Lisle, IL Bankruptcy Attorney Today

Attorney McCormick is known for a straight-talking, easy-to-understand approach that makes the bankruptcy process feel far less overwhelming than it sounds. You will work directly with him throughout your entire case, never being passed off to someone else.

Call The McCormick Law Firm, LLC at 630-517-8570 to schedule your free consultation with our Naperville, IL bankruptcy lawyer today. We offer discounts for military members, veterans, and first responders.