Dischargeable vs. Non-Dischargeable Debts in Texas Bankruptcy

Let’s face it: the word “bankruptcy” often comes with a side of dread. You might imagine mountains of paperwork, long court hearings, and the weight of financial failure. But for Texans struggling with debt, bankruptcy is often the lifesaver they didn’t know they needed. And one of the most important questions people have is: What debts can actually be forgiven?

Not all debts are treated equally in bankruptcy. Some can be wiped away like dust on a cowboy hat (dischargeable debts), while others stick around like an unwelcome dinner guest (non-dischargeable debts). Let’s dive into what these terms mean and how they can impact your fresh start.

What Are Dischargeable Debts in Texas?

Dischargeable debts are the golden tickets of bankruptcy. These are the financial obligations you can eliminate through bankruptcy, allowing you to move forward without the burden of repayment. When these debts are discharged, creditors are legally prohibited from pursuing you for payment.

Common Types of Dischargeable Debts in Texas

Credit Card Debt
Whether it’s from everyday expenses, emergencies, or a shopping spree you regret, credit card debt is one of the most common types of dischargeable debt in bankruptcy.
Medical Bills
Medical emergencies can happen to anyone, and the bills that follow can be devastating. Fortunately, medical debt is dischargeable in most bankruptcy cases.
Personal Loans
Unsecured personal loans (not tied to collateral) can often be forgiven in bankruptcy.
Utility Bills
If you’re behind on electricity, water, or gas bills, these too can be discharged—though you’ll want to keep the lights on by making future payments.
Certain Lawsuit Judgments
Debts resulting from specific types of lawsuits, such as breach of contract cases, are often dischargeable.

What Are Non-Dischargeable Debts in Texas?

Non-dischargeable debts, on the other hand, are the stubborn mules of the financial world. These debts stick with you even after bankruptcy and must still be repaid. Understanding which debts fall into this category can help you decide if bankruptcy is the right solution for your financial woes.

Common Types of Non-Dischargeable Debts in Texas

Student Loans
Let’s start with the big one. Student loans are notoriously difficult to discharge. While there’s a narrow path to forgiveness if you can prove “undue hardship,” most people continue paying student loans post-bankruptcy.
Child Support and Alimony
If you owe child support or spousal support, bankruptcy won’t erase these obligations. Texas courts prioritize family support above debt forgiveness.
Recent Tax Debts
Some older tax debts can be discharged in bankruptcy, but most recent tax obligations and payroll taxes are non-dischargeable.
Court Fines and Criminal Restitution
Fines resulting from criminal activity, such as restitution payments or DUI-related debts, are not dischargeable.
Debts from Fraud or Willful Misconduct
If a creditor can prove that you incurred debt through fraud, misrepresentation, or intentional wrongdoing, those debts will not be forgiven in bankruptcy.

How Does Bankruptcy Handle Mixed Debt?

Here’s where it gets interesting: many people have a mix of dischargeable and non-dischargeable debts. For example, you might have credit card debt (dischargeable) alongside student loans (non-dischargeable).

Bankruptcy can still provide significant relief in these situations by eliminating dischargeable debts, freeing up your income to tackle non-dischargeable obligations.

Chapter 7 vs. Chapter 13 for Mixed Debts

Chapter 7 Bankruptcy: Offers a quick discharge of unsecured debts but doesn’t provide a payment plan for non-dischargeable debts.
Chapter 13 Bankruptcy: Allows you to create a repayment plan for non-dischargeable debts, often with more favorable terms, while discharging unsecured debts at the end of the plan.

Debt Forgiveness in Bankruptcy: What Texans Need to Know

The Role of Exemptions

Texas has some of the most generous bankruptcy exemptions in the country. These exemptions protect essential assets like your home, car, and retirement accounts, ensuring you can keep what you need to rebuild your financial life.

For more details on how exemptions work in Texas, check out this helpful guide from the National Consumer Law Center.

Debts You Might Be Able to Discharge with Legal Help

Some debts hover in the gray area between dischargeable and non-dischargeable. For example:

Older Tax Debts: If the tax debt is from returns filed more than three years ago and meets specific conditions, it might be dischargeable.
Private Student Loans: In rare cases, private student loans that aren’t considered “qualified education loans” can be discharged.

Working with a knowledgeable bankruptcy attorney can make all the difference in identifying and potentially discharging these borderline debts.

Why You Need a Bankruptcy Attorney in Texas

Navigating the bankruptcy process is like navigating Texas backroads without a map—you might get there eventually, but it’ll take longer and involve unnecessary detours. A bankruptcy attorney can:

Help You Understand Your Debts: Determine which debts are dischargeable or non-dischargeable.
Maximize Debt Forgiveness: Ensure you take full advantage of exemptions and discharge rules.
Guide You Through the Process: Handle the paperwork, court hearings, and creditor negotiations.

Breaking the Stigma: Bankruptcy as a Financial Tool

There’s a persistent stigma around bankruptcy that makes many people hesitant to file. But here’s the truth: bankruptcy isn’t about failure—it’s about taking control of your financial future. It’s a legal tool designed to give people a fresh start, and many successful individuals (hello, Walt Disney and Abraham Lincoln!) have used it to rebuild their lives.

Rebuilding After Bankruptcy

Discharging debts through bankruptcy is just the beginning of your journey. Here’s how to rebuild:

Create a Budget: Start with a clear plan for managing expenses and savings.
Rebuild Your Credit: Use secured credit cards or small personal loans to reestablish creditworthiness.
Celebrate Small Wins: Whether it’s paying off a bill on time or saving for a rainy day, every step forward counts.

The Texas Takeaway

Understanding the difference between dischargeable and non-dischargeable debts is essential for making informed decisions about bankruptcy. While not every debt can be wiped away, bankruptcy provides a pathway to eliminate significant financial burdens and regain control of your life.

For Texans, the advantages are clear: generous exemptions, strong legal protections, and the opportunity for a fresh start.

Take the First Step with Kisch Consumer Law

If you’re ready to explore your options for debt forgiveness through bankruptcy, don’t go it alone. At Kisch Consumer Law, we specialize in helping Texans navigate the bankruptcy process with confidence and clarity.

Visit Kisch Consumer Law today to schedule a consultation. Whether you’re facing dischargeable debts, non-dischargeable obligations, or just need guidance, we’re here to help. Let’s work together to chart a path toward financial freedom!