Attorney at Debt Advisors Law Offices
Practice Areas: Chapter 7 Bankruptcy, Chapter 13 Bankruptcy, Stop Foreclosure
Facing personal injury debt can feel like carrying a weight that never lifts. Medical bills arrive long before a case settles, lost wages strain daily expenses, and court judgments can add years of financial pressure. For many in Wisconsin, bankruptcy seems like the only path forward. But does bankruptcy truly erase personal injury debts, or do some obligations survive the process?
The answer is more nuanced than most people realize. Federal law treats these debts differently depending on how they arose, and the type of bankruptcy you file also makes a difference. Understanding where personal injury claims fit into Chapter 7 and Chapter 13 is essential before deciding whether bankruptcy is the right solution.
Personal injury debts differ from typical consumer obligations. While credit cards and payday loans are strictly financial, injury claims carry emotional and physical consequences. These debts may involve unpaid hospital bills, wage replacement, or damages awarded after a trial.
Bankruptcy law falls under federal jurisdiction through the U.S. Bankruptcy Code. That means the same core rules apply nationwide, but Wisconsin exemptions influence what assets you can protect. Understanding how the law treats personal injury debts helps determine if bankruptcy can truly provide relief.
Chapter 7 bankruptcy, often called liquidation, eliminates many unsecured debts. For people struggling with medical costs or judgments tied to negligence, Chapter 7 may provide a way forward. However, it is not a blanket discharge.
Under 11 U.S.C. § 523(a)(6), debts for willful and malicious injury to another person cannot be discharged in Chapter 7.
If a court judgment is based on intentional misconduct, that debt remains. Similarly, medical bills from an accident caused by drunk driving are excluded from discharge under 11 U.S.C. § 523(a)(9). These rules exist to hold individuals accountable for reckless behavior while still giving relief to those facing overwhelming but unintentional debts.
Chapter 13 bankruptcy works differently. Instead of liquidating assets, filers propose a three-to-five-year repayment plan based on income. This approach allows people to keep property while reorganizing debts.
For personal injury debts, Chapter 13 in Wisconsin offers flexibility. Some obligations may be restructured into the plan, spreading out payments. At the end of the repayment period, certain unsecured debts could be discharged. Still, the same exceptions apply. DUI-related injury claims and debts tied to intentional harm cannot be erased, even under Chapter 13.
This chapter may be more realistic for households with steady income who want to protect assets while gaining control over large personal injury obligations. Speaking with a Wisconsin bankruptcy attorney can help determine whether Chapter 7 or Chapter 13 better fits your situation.
Bankruptcy is designed to offer a fresh start, but lawmakers also set boundaries. Several types of injury-related debts cannot be discharged, regardless of the chapter filed.
According to the U.S. Department of Justice, “Bankruptcy is designed to give a fresh start, but not to shield individuals from debts arising from reckless or malicious conduct.”
This means:
These limits ensure victims maintain rights to collect compensation when harm was caused intentionally or through reckless choices.
When bankruptcy cannot eliminate all injury-related obligations, there are other paths to explore. Negotiating directly with creditors may reduce balances or extend payment timelines. Debt consolidation combines several bills into one monthly payment, sometimes at a lower interest rate. Debt settlement companies negotiate lump-sum payoffs, though fees and risks must be carefully considered.
Some families also explore personal loans if they qualify, but this requires good credit and carries its own risks. While none of these options erase debt as quickly as bankruptcy, they can create breathing room for households who do not qualify for a full discharge.
Wisconsin follows federal bankruptcy rules but also applies its own exemptions. These exemptions determine what property you can keep during bankruptcy. For example, the state’s homestead exemption protects a portion of equity in your primary residence. Other exemptions apply to personal property, retirement accounts, and vehicles.
For residents dealing with personal injury judgments, these exemptions can impact how much creditors can collect. Because Wisconsin is a community property state, a spouse’s assets may also be considered during proceedings, making professional guidance especially important. For more on exemptions, you can review the U.S. Courts Bankruptcy Basics guide.
|
Type of Debt |
Chapter 7 | Chapter 13 |
Notes |
| Medical bills from accident | Usually dischargeable | Usually dischargeable | Treated as unsecured debt |
| Judgment for negligence | Often dischargeable | Often dischargeable | Unless tied to misconduct |
| DUI-related injury claims | Not dischargeable | Not dischargeable | Barred under federal law |
| Willful or malicious injury | Not dischargeable | Not dischargeable | Exception under § 523(a)(6) |
| Wrongful death damages | Context-specific | Context-specific | May remain if linked to misconduct |
Yes. Medical bills are typically unsecured debts and may qualify for discharge, unless tied to misconduct.
Chapter 13 allows repayment over time but does not discharge DUI or intentional injury debts.
No. Some settlements may be discharged, but DUI-related claims and malicious injury judgments are excluded.
Congress created this exception to hold individuals responsible for reckless driving and protect accident victims.
Wisconsin follows federal rules but applies state exemptions that affect property you can keep.
Consider eligibility for Chapter 7 or 13, review non-dischargeable categories, and evaluate whether alternatives might work.
Bankruptcy can provide meaningful relief from personal injury debts, especially medical bills or negligence-based judgments. However, debts from DUI accidents or intentional harm survive the process. Chapter 7 offers quicker discharge for qualifying debts, while Chapter 13 allows structured repayment and asset protection. Wisconsin exemptions also play an important role in what you can keep.
If you are struggling with personal injury debts and wondering whether bankruptcy may help, Debt Advisors Law Offices can review your situation and explain your options. Reach out today for a free consultation and take the first step toward regaining financial stability.
Learn about bankruptcy protections, types of bankruptcy, how to get started, what to expect, and who to trust. Filing bankruptcy is the ONLY way to completely eliminate debt. If bankruptcy is right for you, it offers powerful protections that cannot be achieved through alternative solutions such as hardship relief, loans, or debt settlement.
