Will Filing For Bankruptcy Clear All My Debt? Bankrate Caret RightMain Menu Mortgage Mortgages Financing a home purchase Refinancing your existing loan Finding the right lender Additional Resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Bank Banking Compare Accounts Use calculators Get advice Bank reviews Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Credit Card Credit cards Compare by category Compare by credit needed Compare by issuer Get advice Looking for the perfect credit card? Narrow your search with CardMatch Caret RightMain Menu Loan Loans Personal Loans Student Loans Auto Loans Loan calculators Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Invest Investing Best of Brokerages and robo-advisors Learn the basics Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Home Equity Home equity Get the best rates Lender reviews Use calculators Knowledge base Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Loan Home Improvement Real estate Selling a home Buying a home Finding the right agent Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Insurance Insurance Car insurance Homeowners insurance Other insurance Company reviews Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Retirement Retirement Retirement plans & accounts Learn the basics Retirement calculators Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Advertiser Disclosure
Advertiser Disclosure
We are an independent, advertising-supported comparison service. Our goal is to help you make smarter financial decisions by providing you with interactive tools and financial calculators, publishing original and objective content, by enabling you to conduct research and compare information for free - so that you can make financial decisions with confidence.
Bankrate has partnerships with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make Money
The offers that appear on this site are from companies that compensate us. This compensation may impact how and where products appear on this site, including, for example, the order in which they may appear within the listing categories. But this compensation does not influence the information we publish, or the reviews that you see on this site. We do not include the universe of companies or financial offers that may be available to you. SHARE: JGI/Jamie Grill/Getty Images February 26, 2021 Dan Miller is a former contributing writer for Bankrate. Dan covered loans, home equity and debt management in his work. Rashawn Mitchner is a former associate editor at Bankrate. Bankrate logo The Bankrate promise
At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict editorial integrity, this post may contain references to products from our partners. Here's an explanation for how we make money. Bankrate logo The Bankrate promise
Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next. Bankrate follows a strict , so you can trust that we’re putting your interests first. All of our content is authored by and edited by , who ensure everything we publish is objective, accurate and trustworthy. Our banking reporters and editors focus on the points consumers care about most — the best banks, latest rates, different types of accounts, money-saving tips and more — so you can feel confident as you’re managing your money. Bankrate logo Editorial integrity
Bankrate follows a strict , so you can trust that we’re putting your interests first. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. Key Principles
We value your trust. Our mission is to provide readers with accurate and unbiased information, and we have editorial standards in place to ensure that happens. Our editors and reporters thoroughly fact-check editorial content to ensure the information you’re reading is accurate. We maintain a firewall between our advertisers and our editorial team. Our editorial team does not receive direct compensation from our advertisers. Editorial Independence
Bankrate’s editorial team writes on behalf of YOU – the reader. Our goal is to give you the best advice to help you make smart personal finance decisions. We follow strict guidelines to ensure that our editorial content is not influenced by advertisers. Our editorial team receives no direct compensation from advertisers, and our content is thoroughly fact-checked to ensure accuracy. So, whether you’re reading an article or a review, you can trust that you’re getting credible and dependable information. Bankrate logo How we make money
You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. If you’re under a heavy debt load, may be an option of last resort. Many types of debt can be discharged during bankruptcy, but it’s important to understand that not all debts qualify. Some types of debt are difficult — though not impossible — to discharge in bankruptcy. What does filing for bankruptcy do
There are two major avenues for individuals filing for bankruptcy: Chapter 7 and Chapter 13. Both of these attempt to help you reset your finances, but they do it in slightly different ways. What is Chapter 7 bankruptcy
In , most of your debt is discharged, but you also must give up personal property. There are , but all nonexempt property is sold. The proceeds are then distributed among your creditors. What is Chapter 13 bankruptcy
With , you instead reorganize your existing debt. Working with a court-appointed trustee, you review your creditors and debt and come up with a payment plan. Over the course of three to five years, you pay a set monthly amount to the court, which will disperse the funds among your creditors. Following this period, your remaining debts will be discharged. It’s possible to after previously filing Chapter 7 bankruptcy as well. What does discharging debt do
When your debts are discharged, the creditor can no longer require you to pay the debt. Many types of debt are discharged as part of Chapter 7 bankruptcy. In Chapter 13 bankruptcy, your debt is reorganized, and any debt remaining after the payback period is discharged. What debts cannot be eliminated in bankruptcy
There are certain types of debt that cannot be eliminated in . Here are a few examples: Secured debt: If you purchase a car or other merchandise with a loan, you make an agreement with the lender to pay for the item in exchange for the current use of it. If you later file for bankruptcy, you’ll have to decide whether to give the item up or continue paying the lender for it. Child support and alimony: You can’t eliminate a legal obligation to pay child support or alimony. Any outstanding balance owed at the time of a bankruptcy filing will still remain after the case is over. Legal fees and debt in a divorce decree: In many divorce decrees, one spouse agrees to pay for legal fees or some outstanding debts owed by the other spouse. These debts will survive your bankruptcy. For example, if you agree to pay the credit card balances in your name and the name of your ex-spouse, you couldn’t then file bankruptcy to wipe out those debts or the agreement to pay. Your ex-spouse could still force you to pay those bills. Restitution: Court-ordered restitution is not dischargeable in bankruptcy. Restitution is a court-ordered sum of money you must pay for causing financial loss or personal injury to another. This includes payments for any injury you cause resulting from driving under the influence. What debts are difficult to eliminate in bankruptcy
With some other types of debt, it’s possible to get a clean slate with bankruptcy. Student loans: Loans taken out for college may not be eliminated in the vast majority of cases. All types of education loans qualify as and are generally exempt from elimination in bankruptcy: federal student loans, private lender student loans and loans directly from a university. There are exceptions, though. One is that you can prove you’ll never be able to work again because of a complete and permanent disability. Another exception is undue hardship, which requires you to prove that you’ve made good faith efforts to repay the loan, repaying it would keep you from maintaining a minimal standard of living for yourself and your dependents and the circumstances making it difficult for you to make payments are unlikely to change during the repayment period. The standards for both options are very high, however, and it’s rare that either exception is granted. Income tax liability: You can wipe out some income tax liability in a bankruptcy filing, but there is a very specific and extensive test required to do so. The Bottom Line
Discharging your debt through bankruptcy has a drastic effect on your , so it’s not something you’ll want to take lightly. Still, if you find yourself unable to make payments to all of your creditors, it may be time to consider filing bankruptcy. There are two types of bankruptcy available to most people: Chapter 7 and Chapter 13. In both cases, the majority of your unpaid debts will be discharged, though some types of debt are difficult or impossible to eliminate through bankruptcy. SHARE: Dan Miller is a former contributing writer for Bankrate. Dan covered loans, home equity and debt management in his work. Rashawn Mitchner is a former associate editor at Bankrate. Related Articles