What Debts Can and Cannot Be Discharged in Bankruptcy in Massachusetts?

If you are considering bankruptcy, one of your biggest questions is probably simple: Which of my debts can actually be eliminated?

Bankruptcy can provide significant relief from certain financial obligations, but it does not automatically erase everything you owe.



Some debts—such as many credit card balances, medical bills, and unsecured personal loans—may generally be eligible for discharge. Other obligations, including child support and certain taxes, may survive bankruptcy. Still others require a closer legal analysis before anyone can determine whether they can be discharged.

Understanding the difference can help you decide whether bankruptcy may provide the financial relief you need.

What Does It Mean to Discharge a Debt?

A bankruptcy discharge releases you from personal liability for qualifying debts.

Once a debt has been discharged, you generally are no longer legally required to pay it, and the creditor is prohibited from continuing collection efforts against you personally.

That means a creditor generally cannot continue:

• Calling you to collect the discharged debt
• Sending collection letters
• Filing a lawsuit to collect it
• Continuing a collection lawsuit against you
• Taking other collection action based on your personal liability for the discharged obligation

The discharge is one of the primary ways bankruptcy can provide a financial fresh start.

However, it is important to distinguish between eliminating personal liability and eliminating a creditor's rights against collateral.

Does Bankruptcy Eliminate Liens?

Not necessarily.

A bankruptcy discharge generally eliminates personal liability for qualifying debts, but a valid lien that has not been avoided during the bankruptcy case may survive.

For example, your mortgage is generally secured by your home.

Bankruptcy may affect your personal liability for a debt depending on the circumstances, but it does not automatically eliminate a valid mortgage lien and allow you to keep the property without paying for it.

The same general concept can apply to a vehicle loan secured by a car.

This distinction between secured and unsecured debt is important when evaluating what bankruptcy can accomplish.

What Is Unsecured Debt?

Unsecured debt generally is not backed by specific collateral that the creditor can repossess or foreclose on if you fail to pay.

Common examples include:

• Credit card balances
• Medical bills
• Unsecured personal loans
• Certain old utility bills
• Some collection accounts
• Certain court judgments

Many unsecured debts may be dischargeable in bankruptcy, although exceptions can apply.

What Is Secured Debt?

Secured debt is tied to property that serves as collateral.

Common examples include:

• Mortgages
• Auto loans
• Certain financed purchases

If you stop paying a secured debt, the creditor may have rights against the collateral.

Filing bankruptcy does not necessarily mean that you lose all secured property, but it also does not generally allow you to keep collateral indefinitely without addressing the secured creditor's rights.

What happens depends on the type of bankruptcy, the property, your equity, applicable exemptions, your payments, and other circumstances.

Are Credit Card Debts Dischargeable?

Ordinary credit card debt is commonly eligible for discharge.

For someone carrying significant balances because of everyday expenses, interest, unemployment, or other financial difficulties, eliminating qualifying credit card debt can be an important part of the fresh start bankruptcy provides.

However, there are exceptions.

Credit card debt connected to fraud or false representations may face a dischargeability challenge.

The timing and circumstances of recent purchases or cash advances may also matter.

This is why someone considering bankruptcy should be cautious about intentionally running up credit card balances shortly before filing.

Can Medical Bills Be Discharged?

Medical debt is generally unsecured debt and can often be discharged through bankruptcy.

This can include qualifying balances from:

• Hospital stays
• Emergency treatment
• Surgery
• Physician services
• Diagnostic testing
• Ambulance services
• Other medical care

For someone overwhelmed by medical expenses, bankruptcy may provide a way to address those obligations along with other qualifying unsecured debts.

The individual circumstances should still be reviewed before filing.

Can Personal Loans Be Discharged?

Many unsecured personal loans may be dischargeable.

However, the circumstances under which the loan was obtained can matter.

For example, if a creditor claims that money was obtained through fraud or a materially false representation, it may seek a determination that the debt should not be discharged.

Simply owing a personal loan, however, does not automatically make it nondischargeable.

Can Payday Loans Be Discharged?

A payday loan may generally be treated as unsecured debt and potentially discharged, depending on the circumstances.

As with other debts, issues involving fraud, recent borrowing, or other unusual circumstances can affect the analysis.

If you are relying on payday loans or other high-cost borrowing simply to cover ordinary living expenses, that may be a sign that your overall financial situation needs to be evaluated rather than addressed with additional short-term debt.

Can Utility Bills Be Discharged?

Past-due utility bills incurred before filing bankruptcy may generally be dischargeable.

However, filing bankruptcy does not mean you can receive future utility services without paying for them.

Utility companies also have specific rights and obligations under bankruptcy law, so someone concerned about maintaining electricity, gas, water, or another essential service should discuss the situation as part of the bankruptcy planning process.

Can Collection Accounts Be Discharged?

The fact that a debt has been transferred or sold to a collection agency does not necessarily change whether the underlying obligation can be discharged.

If an ordinary dischargeable credit card or medical debt has gone into collections, it may still generally be eligible for discharge.

The nature of the underlying debt matters more than the fact that a collection company is now attempting to recover it.

What Happens to Lawsuits and Judgments?

Bankruptcy may affect certain debts that have already resulted in collection lawsuits or judgments.

The fact that a creditor sued you before you filed does not automatically make an otherwise dischargeable debt nondischargeable.

However, the nature of the judgment matters.

For example, a judgment arising from certain fraudulent or intentionally harmful conduct may receive different treatment from an ordinary judgment arising from unpaid consumer debt.

Liens resulting from judgments can also raise separate issues.

If a creditor has already obtained a judgment against you, it is important to evaluate both the underlying debt and any lien that may have been created.

Can Tax Debt Be Discharged?

Sometimes—but tax debt is one of the more complicated areas of bankruptcy law.

Certain tax obligations are specifically excluded from discharge.

Whether a particular income tax debt may qualify for discharge can depend on factors such as:

• The type of tax
• When the tax return was due
• When the return was filed
• When the tax was assessed
• Whether the return was fraudulent
• Whether there was an attempt to evade the tax

Because tax dischargeability depends heavily on timing and the nature of the obligation, you should not assume that bankruptcy will either eliminate all tax debt or no tax debt.

A detailed review is necessary.

Are Child Support Payments Dischargeable?

No. Domestic support obligations such as child support generally cannot be discharged in bankruptcy.

If you owe past-due child support, bankruptcy does not simply erase that obligation.

Domestic support obligations receive significant protection under federal bankruptcy law.

Chapter 13 may potentially provide a structured way to address certain arrears as part of a repayment plan, but the underlying support obligation is not simply eliminated through discharge.

Can Alimony Be Discharged?

Domestic support obligations, including qualifying alimony or spousal support, generally are not dischargeable.

The label placed on an obligation in a divorce agreement is not necessarily the only consideration.

Bankruptcy law determines whether an obligation qualifies as a domestic support obligation.

If you have substantial financial obligations arising from a divorce, the underlying documents and nature of each obligation should be reviewed carefully.

What About Other Debts From a Divorce?

This is an area where Chapter 7 and Chapter 13 can differ.

Domestic support obligations such as child support and alimony remain protected from discharge.

However, certain other debts arising from a divorce or separation—such as some property-settlement obligations—can receive different treatment depending on the bankruptcy chapter.

This is one reason choosing between Chapter 7 and Chapter 13 should involve more than simply comparing income requirements or repayment periods.

Can Student Loans Be Discharged?

Student loans require special treatment under bankruptcy law.

Many government-funded, government-guaranteed, and qualifying educational loans are excepted from an ordinary bankruptcy discharge unless the debtor establishes the legal requirements for an undue-hardship discharge.

That means student loan debt generally should not be treated like an ordinary credit card or medical bill when evaluating bankruptcy.

However, borrowers should not automatically assume that every debt connected in some way to education is legally nondischargeable.

The type of loan and applicable bankruptcy rules matter.

If student loans make up a significant portion of your debt, those obligations should be specifically evaluated rather than relying on the common statement that “student loans can never be discharged.”

Are Criminal Fines Dischargeable?

Many governmental fines, penalties, and criminal restitution obligations are protected from discha

rge.

Bankruptcy generally should not be viewed as a way to erase criminal penalties.

If your debts include court-ordered fines, restitution, or other obligations arising from a criminal case, those debts need to be evaluated separately from ordinary consumer debts.

What About Debt Caused by Drunk Driving?

Federal bankruptcy law specifically protects certain debts arising from death or personal injury caused by the debtor's unlawful operation of a vehicle while intoxicated.

For example, if someone is held financially responsible for injuries caused by drunk driving, bankruptcy generally cannot be used to discharge that qualifying liability.

Can Debts From Fraud Be Discharged?

Debts obtained through fraud, false pretenses, or certain false representations may be excepted from discharge.

These situations can involve additional proceedings within the bankruptcy case.

A creditor may ask the bankruptcy court to determine that a particular debt should survive because of the way the debt was incurred.

Examples might involve allegations that someone:

• Obtained money through intentional misrepresentation
• Used materially false information to obtain credit
• Committed certain forms of fraud
• Engaged in embezzlement or larceny
• Committed fraud or defalcation while acting in a fiduciary capacity

The bankruptcy court may ultimately need to determine whether the legal requirements for nondischargeability have been established.

Are Debts for Intentional Injuries Dischargeable?

Certain debts arising from willful and malicious injuries may not be dischargeable.

This is different from ordinary negligence.

The Bankruptcy Code treats certain intentionally harmful conduct differently because bankruptcy's fresh-start protections are not intended to erase every type of liability regardless of how it arose.

The exact treatment can also differ between Chapter 7 and Chapter 13 in some circumstances.

What Happens If You Forget to List a Debt?

Bankruptcy requires debtors to provide complete and accurate information about their financial affairs, including their creditors.

Do not intentionally leave a debt off your bankruptcy paperwork simply because you do not want a particular creditor involved.

Unscheduled debts can create dischargeability issues under federal bankruptcy law, depending on the circumstances and whether the creditor had notice or actual knowledge of the bankruptcy in time to protect its rights.

The safest approach is to disclose your debts accurately and completely.

What Happens to a Mortgage in Bankruptcy?

A mortgage is a secured debt.

Even when personal liability on a qualifying debt may be affected by a bankruptcy discharge, a valid lien can survive bankruptcy.

In practical terms, filing bankruptcy does not ordinarily mean that you can eliminate your mortgage and continue owning the home free of the lender's lien.

For homeowners who want to keep their property, the treatment of mortgage payments, arrears, equity, exemptions, and the bankruptcy chapter selected can all matter.

What Happens to a Car Loan?

An auto loan is also generally secured by the vehicle.

Bankruptcy does not automatically erase the lender's security interest while allowing you to keep the car without addressing the debt.

Depending on whether you file Chapter 7 or Chapter 13 and your particular circumstances, there may be different options for handling the vehicle and loan.

Before filing, it is important to evaluate:

• The vehicle's value
• The outstanding loan balance
• Your equity
• Your monthly payment
• Whether you want to keep the vehicle
• Whether the payment remains affordable

The goal should be to determine whether keeping the vehicle makes financial sense as part of your broader fresh start.

Are HOA or Condominium Fees Dischargeable?

Homeowners association and condominium obligations can be more complicated than ordinary unsecured bills.

Federal bankruptcy law specifically addresses certain condominium, cooperative, and homeowners association assessments that become due while the debtor continues to hold a qualifying ownership or possessory interest.

If you own property subject to association fees, do not assume filing bankruptcy automatically eliminates all present and future assessments.

What Is the Difference Between Chapter 7 and Chapter 13 Discharge?

Both Chapter 7 and Chapter 13 can provide a discharge, but they work differently.

Chapter 7

Chapter 7 is generally a liquidation form of bankruptcy.

For an eligible debtor, many qualifying unsecured debts can be discharged without completing a multiyear repayment plan.

However, Chapter 7 has specific discharge exceptions, and property issues must be evaluated carefully.

Chapter 13

Chapter 13 generally involves a court-approved repayment plan lasting several years.

The debtor makes payments according to the plan and generally receives a discharge after completing the required payments.

Chapter 13's discharge provisions differ in certain respects from Chapter 7, which means the bankruptcy chapter selected can sometimes affect how a particular obligation is treated.

Does Chapter 13 Eliminate All Debt After the Repayment Plan?

No.

Completing a Chapter 13 plan can result in discharge of qualifying debts, but certain obligations can remain afterward.

Examples can include qualifying:

• Domestic support obligations
• Certain taxes
• Most covered educational loans
• Certain long-term debts, such as a home mortgage
• Criminal restitution and fines
• Certain liabilities arising from intoxicated driving

A Chapter 13 repayment plan should therefore be evaluated based on both what happens during the plan and what financial obligations will remain after it is completed.

Can a Creditor Challenge the Discharge of a Debt?

Yes.

For certain categories of debt, a creditor can ask the bankruptcy court to determine that a particular obligation should not be discharged.

This may occur in disputes involving allegations such as:

• Fraud
• False representations
• Fiduciary misconduct
• Embezzlement
• Larceny
• Willful and malicious injury

The creditor must satisfy applicable legal and procedural requirements.

A dischargeability dispute is different from an ordinary creditor simply objecting because it would prefer to be paid.

Can Your Entire Bankruptcy Discharge Be Denied?

Yes, under certain circumstances.

There is an important distinction between:

1. A particular debt being nondischargeable, and
2. The debtor being denied a Chapter 7 discharge altogether.

A particular nondischargeable debt remains the debtor's responsibility even though other qualifying debts may be discharged.

A denial of the overall discharge can have much broader consequences.

Conduct that may create serious problems can include:

• Concealing assets
• Fraudulently transferring property
• Destroying financial records
• Making false statements in the bankruptcy case
• Failing to explain the loss of assets
• Disobeying certain bankruptcy court orders

Honesty and complete disclosure are essential throughout the bankruptcy process.

Should You Pay Off Certain Debts Before Filing?

Be careful about deciding on your own which creditors to pay immediately before bankruptcy.

Paying a relative, transferring property, or favoring one creditor over others shortly before filing can create issues that need to be examined in the bankruptcy case.

Likewise, taking money from retirement accounts or selling important assets simply to pay dischargeable debt may not always be financially beneficial.

Before making major financial moves in anticipation of bankruptcy, consider obtaining legal guidance.

Should You Stop Paying All Your Bills Before Filing?

There is no universal answer.

Different debts have different consequences.

Stopping payments on a credit card is very different from stopping payments on a mortgage for a home you intend to keep, a car loan for a vehicle you need, child support, or another nondischargeable obligation.

Bankruptcy planning should account for:

• Which debts are dischargeable
• Which debts will survive
• Which debts are secured
• What property you want to keep
• Your income and expenses
• Whether Chapter 7 or Chapter 13 is appropriate

Do not make major payment decisions based solely on the assumption that bankruptcy will erase everything.

How Do You Know Which Debts Bankruptcy Will Eliminate?

Start by creating a complete list of what you owe.

For each debt, identify:

• The creditor
• Approximate balance
• Type of debt
• Whether collateral secures it
• When the debt arose
• Whether a lawsuit or judgment exists
• Whether the debt relates to taxes
• Whether it arose from divorce or support
• Whether it involves student loans
• Whether there are unusual circumstances surrounding the debt

A bankruptcy attorney can then evaluate how the different obligations are likely to be treated.

Why Does the Type of Debt Matter So Much?

Two people can owe the same total amount of money and have very different bankruptcy outcomes.

For example, someone with $75,000 primarily in credit card and medical debt may have a very different situation from someone who owes $75,000 primarily in child support, recent taxes, and certain student loans.

The amount of debt matters, but the type of debt may be just as important when determining whether bankruptcy can provide meaningful relief.

That is why evaluating dischargeability should be part of the decision before filing.

Can Bankruptcy Still Help If Some of Your Debts Cannot Be Discharged?

Potentially.

Bankruptcy does not have to eliminate every obligation to provide meaningful financial relief.

For example, discharging qualifying credit cards, medical bills, and personal loans may free up income that can then be used to address obligations that survive bankruptcy.

Chapter 13 may also provide a structured repayment process for certain debts.

The right question is not always, “Will bankruptcy erase everything?”

Instead, consider whether bankruptcy can improve your overall financial position and give you a realistic path forward.

When Should You Speak With a Bankruptcy Attorney?

Consider seeking legal guidance if:

• You cannot keep up with minimum payments
• Collection agencies are contacting you
• You are being sued by creditors
• Your wages are being garnished
• You are using one debt to pay another
• Medical bills have become unmanageable
• You are behind on your mortgage or car loan
• You owe substantial tax debt
• You are worried about losing property
• You are unsure whether your debts can be discharged
• You are considering Chapter 7 or Chapter 13

The earlier you understand how your debts are likely to be treated, the easier it may be to avoid financial decisions that could complicate a future bankruptcy.

Understanding Your Bankruptcy Options in Massachusetts

Bankruptcy can provide powerful relief, but it does not erase every financial obligation.

Many common unsecured debts—including qualifying credit card balances, medical bills, personal loans, and collection accounts—may generally be discharged.

Other obligations, such as child support, qualifying alimony, certain taxes, most covered student loans, criminal fines and restitution, and certain debts arising from fraud or intentionally harmful conduct may survive bankruptcy.

Secured debts such as mortgages and vehicle loans also require additional consideration because a discharge does not automatically eliminate valid liens.

The Law Office of William J. O'Neil helps individuals and families in East Longmeadow, Springfield, and surrounding Massachusetts communities evaluate Chapter 7 and Chapter 13 bankruptcy and determine how different debts may be treated.

If debt has become difficult to manage, contact The Law Office of William J. O'Neil to discuss your financial situation, the debts you owe, and whether bankruptcy may provide a path toward a fresh start.