Chapter 7 · Beverly Hills
What Debts Are Wiped Out in Chapter 7
Chapter 7 wipes out most unsecured debts, including credit cards, medical bills, personal loans and many old judgments. A few debts survive, such as child support and most recent taxes. Call (310) 362-9071 and we will go through your debts one by one at a free consultation.
- A discharge is a court order. Creditors can never collect a discharged debt from you.
- Most unsecured consumer debt is discharged.
- Recent luxury charges and cash advances can raise questions.
At a glance
What "wiped out" means in Chapter 7
A debt is wiped out in Chapter 7 when the court enters your discharge. The discharge is a permanent order. It bars creditors from ever trying to collect that debt from you again.
That means no calls, letters, lawsuits, wage garnishments or bank levies on that debt. The debt is gone as to you personally. A co-signer can still owe it, and a lien on property can stay attached to that property.
Most people in Chapter 7 bankruptcy get their discharge a few months after filing. Our Chapter 7 timeline walks through each step.
Debts Chapter 7 usually wipes out
- Credit cards. Bank cards, store cards and gas cards are usually discharged in full. See our page on credit card debt relief.
- Medical bills. Hospital, doctor, ambulance and lab bills are discharged like any other unsecured debt.
- Personal loans. Unsecured loans from banks, online lenders, friends and family are usually discharged.
- Payday loans. These are unsecured and usually discharged. Very recent loans can draw questions.
- Balances after a repossession. If your car was taken and sold, the amount still owed after the sale is usually discharged.
- Balances after a foreclosure or short sale. Any amount you still owe on the loan after the home is gone is usually discharged.
- Old utility bills. Past-due gas, electric, phone and internet bills are usually discharged.
- Many court judgments. A judgment on a credit card or loan is usually discharged. A judgment lien on your home may need a separate motion.
- Collection accounts. Debts sold to a collection agency or debt buyer are treated like the original debt.
- Back rent and lease balances. Rent owed on a past apartment and money owed after a car lease ends early are usually discharged.
- Some older income taxes. Income taxes can be wiped out if they meet timing rules. See below.
- Business debts you signed for personally. If you signed a personal guarantee for a business loan or lease, your personal liability is usually discharged.
When older income taxes can be wiped out
Some older income taxes can be wiped out in Chapter 7. Each tax year must meet all of these tests:
- The return was due, including extensions, more than 3 years before you file.
- You filed the return more than 2 years before you file bankruptcy.
- The tax was assessed more than 240 days before you file.
- The return was not fraudulent, and you did not try to evade the tax on purpose.
Some events, such as an earlier bankruptcy, pause these clocks. A return the IRS prepared for you does not count as a return you filed. We pull your IRS transcripts to check the dates. Read more on IRS tax debt in bankruptcy.
What to watch for before you file
Some recent charges can turn a normal debt into one the creditor can fight. The law presumes fraud in two cases, using amounts in effect for cases filed on or after April 1, 2025:
- Luxury purchases. More than $900 in luxury goods or services from one creditor within 90 days before you file.
- Cash advances. More than $1,250 in cash advances on an open-ended credit line within 70 days before you file.
A presumption is not the end of the story. You can show the charge was for a real need or that you meant to repay. But the creditor has to sue you in the bankruptcy court to block the discharge, and you would need to defend that case. See adversary proceeding defense.
Other habits to avoid before filing:
- Running up cards you plan to wipe out. New charges made with no plan to pay can be challenged as fraud.
- Paying back family first. Paying a relative in the year before filing can let the trustee take that money back from them.
- Leaving debts off your forms. List every creditor, even ones you plan to keep paying.
- Moving property around. Giving away or hiding property can cost you your entire discharge.
Debts that are not wiped out
Some debts survive Chapter 7. The main ones are child support and alimony, most recent taxes, most student loans, criminal fines and restitution, and debts from fraud or willful injury if the creditor wins in court. Our page on debts Chapter 7 will not discharge lists them all and explains your options.
Secured debts work differently. Chapter 7 wipes out your personal duty to pay a car loan or mortgage. It does not remove the lender's right to take the car or house if you stop paying. Read can I keep my car in Chapter 7 and can I keep my house in Chapter 7.
What it costs
- Chapter 7: flat attorney fee from $1,200, plus the $338 court filing fee
- Chapter 13: attorney fee quoted in writing, and part of it can be paid through the plan
- Payment plans are available, and the first consultation is free
More on Chapter 7 bankruptcy
- Chapter 7 bankruptcy in Beverly Hills
- California Median Income Figures for the Means Test
- What Debts Are Wiped Out in Chapter 7
- Debts Chapter 7 Will Not Discharge
- Can I Keep My Car in Chapter 7?
- Can I Keep My House in Chapter 7?
- The Chapter 7 Timeline, From Filing to Discharge
- What the Chapter 7 Trustee Looks For
- Filing Chapter 7 With No Income or Between Jobs
- Filing a Second Chapter 7: The Eight-Year Rule
- Chapter 7 for Married Couples: Filing Alone or Together
- What Happens at the 341 Meeting of Creditors
- Redeeming a Car in Chapter 7
- Means test evaluation
- Reaffirmation agreements
Questions about dischargeable debts
Does Chapter 7 wipe out credit card debt?
Yes, Chapter 7 usually wipes out credit card debt in full. The exception is recent charges that look like fraud, such as large luxury purchases or cash advances shortly before filing.
Does Chapter 7 wipe out medical bills?
Yes, Chapter 7 wipes out medical bills along with other unsecured debts. There is no limit on how much medical debt can be discharged.
Can Chapter 7 wipe out a court judgment against me?
Yes, Chapter 7 can wipe out most court judgments on consumer debts. If the judgment created a lien on your home, we may need to file a separate motion to remove that lien. A judgment for fraud or willful injury may not be discharged.
Does Chapter 7 wipe out a business debt I signed for personally?
Yes, Chapter 7 usually wipes out your personal liability on a business debt you signed for personally. The business itself is not discharged in your personal case. The company's own debts are a separate matter.
Do I have to list a debt I want to keep paying?
Yes, you have to list every debt on your bankruptcy forms, including ones you want to keep paying. You can still choose to repay a debt after your case ends.
Free consultation
Find out which of your debts can go
Call (310) 362-9071 or send the form. Bring a list of what you owe and we will go through each debt with you for free.
Law Offices of John Asuncion9454 Wilshire Blvd., Penthouse Floor
Beverly Hills, CA 90212
(310) 362-9071
Monday to Friday, 9 a.m. to 6 p.m.