Unsecured debt in bankruptcy—credit card balances, medical bills, personal loans, past-due utilities—is the category most consumer filings are built to eliminate. In a Chapter 7 case, these debts are typically wiped out entirely at discharge, often without the creditor receiving a cent. In a Chapter 13 case, you repay a portion through a three- or five-year plan and the rest is discharged. A handful of unsecured obligations, though, survive bankruptcy no matter which chapter you file, and one procedural mistake—leaving a creditor off your schedules—can keep an otherwise dischargeable debt alive.
Priority Versus General Unsecured Claims
Federal law divides unsecured claims into two groups, and the distinction drives everything that follows.1Office of the Law Revision Counsel. 11 USC 507 – Priorities
Priority unsecured debts are the ones Congress decided serve a higher social purpose and should be paid before anything else. The two that matter most to consumer filers are domestic support obligations—child support and alimony—and certain recent tax debts owed to federal, state, or local governments. Unpaid employee wages and benefit-plan contributions also sit in this group when they meet specific timing and dollar limits.
General unsecured debts are everything else you owe without collateral: credit cards, medical bills, personal loans, deficiency balances, old utility accounts. These claims have no statutory protection and stand at the bottom of the repayment ladder. In most consumer Chapter 7 cases, general unsecured creditors receive nothing, because there is nothing left to distribute after exempt property is set aside and priority claims are covered.
Chapter 7 Versus Chapter 13
The chapter you file under changes how your unsecured debt is handled.
Chapter 7 Liquidation
Chapter 7 discharges most general unsecured debt in exchange for surrendering non-exempt assets to a trustee, who sells them and distributes the proceeds. To qualify, you take the means test, which compares your household income against the median income for a family of the same size in your state. Below-median filers pass automatically. Above-median filers have certain allowed expenses and secured debt payments subtracted from their income to see whether they have enough disposable income to fund a plan instead. Failing the test doesn’t bar you from bankruptcy; it usually pushes you into Chapter 13.
Most consumer Chapter 7 cases are “no-asset” cases. Everything the filer owns fits within exemption limits, the trustee has nothing to sell, and general unsecured creditors receive zero. The debts are still discharged.
Chapter 13 Repayment Plans
Chapter 13 lets you keep your property and repay creditors over three to five years.2United States Courts. Chapter 13 – Bankruptcy Basics The plan runs three years if your income is below your state’s median, five years if above. Priority unsecured debts must be paid in full through the plan. General unsecured creditors, though, may receive only a fraction of what they’re owed—sometimes zero percent—as long as the plan satisfies two rules: you commit all your projected disposable income for the required period, and unsecured creditors get at least what they would have received in a hypothetical Chapter 7 liquidation. Whatever balance remains on general unsecured debt at the end of a completed plan is discharged.
Chapter 13 has debt ceilings. After the temporary combined limit of $2,750,000 expired in June 2024, eligibility reverted to a two-part test with separate caps on secured and unsecured debt, adjusted periodically for inflation. Confirm the current thresholds with the court or an attorney before filing. If your debts exceed them, Chapter 11 is the alternative.
Which Unsecured Debts Get Discharged
Discharge is a court order permanently releasing you from personal liability for qualifying debts. Once entered, creditors can never again pursue collection on those obligations—no calls, no lawsuits, no wage garnishment. General unsecured debts like credit card balances, medical bills, personal loans, deficiency judgments, and old utility bills are typically dischargeable in both Chapter 7 and Chapter 13.
Federal law carves out specific exceptions that survive bankruptcy regardless of chapter:3Office of the Law Revision Counsel. 11 USC 523 – Exceptions to Discharge
- Domestic support obligations. Child support and alimony remain fully enforceable.
- Student loans. Not discharged unless you prove “undue hardship” in a separate adversary proceeding, a standard that historically has been difficult to meet, though recent federal guidance has pushed for more consistent and less restrictive application.
- Debts from fraud or intentional harm. Money obtained through false pretenses, embezzlement, or larceny, and debts arising from willful and malicious injury to another person or their property.
- Certain fines and penalties. Government fines, penalties, and restitution tied to criminal conduct.
- Debts you failed to list on your schedules where the creditor had no notice of the case.
When Tax Debt Can Be Discharged
Income tax debt is unusual: some of it can be wiped out and some can’t. To qualify for discharge, an income tax debt has to clear three timing tests at once:
- Three-year rule. The tax return was originally due, including extensions, at least three years before you filed bankruptcy.
- Two-year rule. You actually filed the return at least two years before your petition. If the IRS filed a substitute return for you, some courts hold that no “return” was filed, making the tax non-dischargeable.
- 240-day rule. The IRS assessed the tax at least 240 days before your filing, or hasn’t assessed it at all. Events like an offer in compromise or a prior bankruptcy can extend this window.
Tax debts involving fraud or willful evasion are never dischargeable, regardless of timing. The math on tax discharge is genuinely tricky, and miscalculating can leave you thinking a debt is gone when it isn’t. This is one area where professional help earns its fee.
Listing Every Creditor on Schedule E/F
Every unsecured debt you owe when you file must appear on Official Form 106E/F.4United States Courts. Official Form 106E/F – Creditors Who Have Unsecured Claims The form is split into two parts, one for priority claims and one for general unsecured claims, and for each creditor you’ll provide:
- The creditor’s legal name and the address where it receives legal notices.
- The last four digits of the account number.
- The date the debt was incurred.
- The current balance as of your filing date.
- Whether the claim is contingent (depends on a future event), unliquidated (the exact amount hasn’t been determined), or disputed (you disagree about the amount or existence of the debt).
The court uses this schedule to notify every listed creditor that you’ve filed, which triggers the automatic stay and halts collection efforts. You can amend your schedules any time before the case closes to add a creditor you missed.5Legal Information Institute. Federal Rules of Bankruptcy Procedure Rule 1009 – Amending a Voluntary Petition, List, Schedule, or Statement If you never amend and the creditor never learns about the case in time to file a proof of claim, the debt may survive your discharge, unless the creditor had independent notice or knowledge of the filing.3Office of the Law Revision Counsel. 11 USC 523 – Exceptions to Discharge It’s one of the easiest mistakes to make and one of the most costly. Double-check every account before filing: pull a recent credit report, dig out old collection letters, and ask about medical bills that may have been sold to a debt buyer.
Payments Made to Creditors Before You File
If you paid certain unsecured creditors more than they’d otherwise receive in bankruptcy during the months before filing, the trustee can claw those payments back into the estate. The legal term is a preferential transfer, and it exists to stop debtors from playing favorites among creditors on the way into bankruptcy.
A trustee can recover a payment to an unsecured creditor when all of these are true: the payment was for a pre-existing debt, you were insolvent at the time (the law presumes insolvency during the 90 days before filing), and the payment let the creditor receive more than they’d get in a Chapter 7 liquidation.6Office of the Law Revision Counsel. 11 USC 547 – Preferences The lookback is 90 days for ordinary creditors and one year for insiders such as family members or business partners.
Several defenses shield a payment from clawback. The ordinary-course-of-business exception protects a bill paid on its normal schedule consistent with your history with that creditor. Substantially contemporaneous exchanges, like paying cash on delivery for goods, are also safe, as are situations where the creditor gave you new value after receiving the payment. These defenses matter most for business debtors but can apply to consumers who made a large payment to a single creditor in the months before filing—repaying a personal loan from a relative is the classic example.
Voluntary Repayment and Reaffirmation
Discharge eliminates your legal obligation on a debt, but it doesn’t stop you from paying it if you want to. Federal law explicitly protects your right to voluntarily repay a former creditor after the case closes.7Office of the Law Revision Counsel. 11 USC 524 – Effect of Discharge Some people do this to preserve a relationship with a doctor, a family member, or a small business.
A reaffirmation agreement is more formal. By signing one before your discharge is entered, you agree to remain legally liable on a specific debt as though you never filed. Reaffirmation is strictly voluntary. No law requires it and no creditor can force it. If you’re not represented by an attorney when you negotiate the agreement, the bankruptcy court has to approve it and will look at whether the payments create an undue hardship on your household. You can cancel a reaffirmation at any time before the discharge order is entered, or within 60 days after the agreement is filed with the court, whichever is later.
Reaffirming unsecured debt is rarely a good idea, since eliminating those obligations is the point of filing. The one case where it can make sense is a debt with a co-signer you want to protect, who would otherwise be left holding the full balance after your discharge.