In Chapter 7 bankruptcy, certain debts cannot be discharged (eliminated), including child support, alimony, most student loans, recent tax debts (typically within three years), and government fines or penalties. Other non-dischargeable debts include those for willful/malicious injuries, drunk driving accidents, and debts not listed in your filing.
Debts not discharged include debts for alimony and child support, certain taxes, debts for certain educational benefit overpayments or loans made or guaranteed by a governmental unit, debts for willful and malicious injury by the debtor to another entity or to the property of another entity, debts for death or personal ...
What can you not do in a Chapter 7 bankruptcy?
The Means Test:
If your income exceeds the median, you may not qualify for Chapter 7 and may be required to file for Chapter 13 bankruptcy instead. For example, as of 2025, the median income for a family of one in California is $76,190, and for a family of four, it is $130,845.
To qualify for Chapter 7 bankruptcy in California, your income must be below the state's median income for your household size. For example, as of 2025, the monthly income limit is $5,030 for a single-person household and $8,620 for a four-person household.
Common types of assets and nonexempt property a debtor could potentially lose in Chapter 7 bankruptcy include:
Non-Exempt Funds in Checking Accounts
A trustee can ask a bank to unfreeze an account if it contains exempt funds. An individual filing for bankruptcy under Chapter 7 may face an account freeze by a bank. You can let the bankruptcy trustee know about the freeze and ask them to get the bank to release the freeze.
Without court approval, the Chapter 7 Trustee can force the recipient to return the money or property. However, the income you receive after filing your case is yours to use. Spend, save, or invest it – the Chapter 7 Trustee has no right to take the money or question what you do with it.
U.S.C. Section 523(a)(7), government fines and penalties are generally nondischargeable under Chapter 7. This includes parking tickets, moving-violation fines, and the penalty portion of toll violations.
Generally, a discharge is granted: In an individual debtor's Chapter 7 case 60-90 days after the date set for the first meeting of creditors (11 USC 341 meeting)
Secured creditors generally get priority, while unsecured creditors are paid pro-rata on their claims. The intent of Chapter 7 is to give the debtor a “fresh start” and for the creditors to recover as much as they otherwise would've been able to under non-bankruptcy law.
Certain Tax Debts:
– Non-dischargeable tax debts include recent income tax debts (typically within the last three years), tax debts associated with unfiled returns, and tax debts resulting from fraudulent activity.
Chapter 7 Bankruptcy: What to Avoid Before Filing
You can keep $33,650 in cash while filing Chapter 7 bankruptcy if you do not have any other property you want to protect and use the 703.140(b)(5) wildcard exemption.
It's not a good idea to empty an account and hide the funds to avoid paying creditors. Hiding assets from bankruptcy creditors, including hiding savings account funds, is a fraudulent act with stiff penalties. Fortunately, appropriate ways to protect savings accounts before filing for bankruptcy exist.
The bankruptcy trustee typically asks for the most recent 2–3 months of bank statements, but they have the authority to request more if needed. In most Chapter 7 cases, trustees review statements from the 60–90 days before your filing date to verify your balance, income deposits, and spending patterns.
Want to make your assets virtually untouchable by creditors and lawsuits? Equity stripping may be the answer. This advanced technique involves encumbering your assets with liens or mortgages held by friendly creditors, such as an LLC or trust you control.
Health insurance, disability insurance, and health savings account expenses. The monthly expenses for health insurance, disability insurance, and health savings accounts that are reasonably necessary for yourself, your spouse, or your dependents.
In a Nutshell
Chapter 7 bankruptcy is a powerful tool that wipes out common consumer debts, including credit card debt, medical bills, personal loans, payday loans, unpaid utility bills, and more. Some debts, like child support and alimony, can't be discharged in bankruptcy.