Which Debts Can’t Be Discharged in a Chapter 7 Bankruptcy in Wisconsin?

Filing for Chapter 7 bankruptcy in Wisconsin can bring significant relief if you’re overwhelmed by debt. While it’s often seen as a fresh start, Chapter 7 bankruptcy doesn’t wipe the slate completely clean. Although filing for this type of bankruptcy can allow you to discharge many debts, some will still follow you after your case is closed.

Knowing which debts can’t be discharged in a Chapter 7 bankruptcy in Wisconsin is crucial to making an informed decision about whether this path is right for you. This guide breaks it down in plain language so you understand what to expect.

How Chapter 7 Bankruptcy Works in Wisconsin

Chapter 7 bankruptcy is a legal process that helps individuals eliminate many unsecured debts. It’s often called “liquidation bankruptcy,” but in most cases, you don’t lose your property thanks to exemptions available under Wisconsin law. Instead, the goal is to discharge (legally erase) debts that you can’t afford to pay.

An automatic stay goes into effect once you file. This stops collection efforts, wage garnishments, and lawsuits. The bankruptcy court typically grants a discharge for qualifying debts after about three to four months.

Certain debts, including child support, alimony, and most student loans, are presumed non-dischargeable under federal bankruptcy law. — U.S. Bankruptcy Code, 11 U.S.C. § 523

However, not every debt qualifies for discharge. Some are automatically excluded. Creditors may challenge others in court.

Non-Dischargeable Debts Under Federal Bankruptcy Law

The Bankruptcy Code outlines specific types of debt that Chapter 7 bankruptcy cannot erase. These debts either survive automatically or require court approval to determine whether discharge is appropriate.

• Domestic Support Obligations– Child support and alimony are always non-dischargeable. These debts remain enforceable even after bankruptcy and cannot be paused or reduced through Chapter 7.
• Student Loans– Most student loans survive bankruptcy unless you can prove “undue hardship” in court. This requires filing an adversary proceeding or a formal lawsuit within your bankruptcy case.
• Tax Debts– Recent income tax debts typically remain due after a Chapter 7 bankruptcy. Discharge may apply only if:
  • The tax return was filed at least two years ago
  • The debt is at least three years oldThe tax was assessed at least 240 days before filing
  • In Wisconsin, state income taxes from recent years may not be discharged if they don’t meet the three-part IRS test: age, filing status, and assessment date.
• DUI-Related Debts– If you caused injury or death while driving under the influence, you can’t discharge the related debts (such as medical expenses or judgments).
• Criminal Fines and Restitution– Any court-ordered criminal fines or restitution from a conviction cannot be erased through bankruptcy. They must still be paid.
• Fraudulent or Misleading Debts– Debts obtained through fraud, misrepresentation, or recent luxury spending (typically within 90 days before filing) may be excluded if creditors challenge them in court.

Wisconsin-Specific Bankruptcy Exceptions

In Wisconsin, some debts remain even after a Chapter 7 discharge. One example is reaffirmed debts. If you choose to reaffirm a car loan or mortgage, you agree to continue paying it despite your bankruptcy filing. Even after a successful discharge, missed payments on reaffirmed loans can still result in repossession or foreclosure.

Another exception involves satisfaction of judgments. Although certain debts may be discharged in bankruptcy, they can still appear on public records as outstanding judgments. To ensure your legal and credit records accurately reflect your discharge, you may need to complete additional paperwork.

Finally, Wisconsin tax debt may survive bankruptcy if it doesn’t meet federal discharge timing rules. This generally includes state income taxes from recent years or taxes that were assessed too recently to qualify for discharge.

What Are Adversary Proceedings?

An adversary proceeding is a lawsuit filed within your bankruptcy to decide whether you may discharge a particular debt. Creditors may use this process to challenge discharge if they believe you acted fraudulently.

A creditor may file an adversary proceeding if they believe the debt was incurred through fraud, false representation, or malicious intent.

You might also file one to seek discharge of student loans. These proceedings involve presenting evidence, and outcomes vary depending on the circumstances.

Debts Commonly Discharged in Chapter 7

Not all debts survive Chapter 7. Many common financial obligations are fully dischargeable under Wisconsin and federal law, including:

• Credit Card Debt – Most frequently discharged debt type. Wiped out unless used for fraud or luxury spending right before filing.
• Medical Bills – Includes hospital, doctor, dental, and emergency expenses. Fully dischargeable regardless of the amount owed.
• Utility Bills – Covers electric, gas, water, phone, and internet bills used before filing.
• Personal Loans and Payday Loans – Dischargeable if unsecured and not tied to fraud. Includes loans from lenders, apps, or friends.
• Leases and Contract Obligations – Broken apartment leases or service contracts can be discharged, unless tied to fraud or malicious intent.

Debt Types and Dischargeability in Wisconsin Chapter 7

FAQs

What is a non-dischargeable debt in Chapter 7 bankruptcy?

Non-dischargeable debt remains legally enforceable even after you complete your bankruptcy case. Examples include child support, recent tax debts, and most student loans.

Can student loans be discharged under this chapter?

Student loans are rarely discharged. You must file an adversary proceeding and prove that repaying the loan would cause you undue hardship.

Are credit card debts continuously discharged in Wisconsin?

Most credit card debt is dischargeable unless the court finds the charges were made fraudulently, such as luxury purchases right before filing or the use of false information.

Do I still owe on my car after Chapter 7 if I reaffirm the loan?

Yes. If you reaffirm a car loan, you’re agreeing to keep the debt after bankruptcy. You must continue making payments, and the lender can repossess the car if you fail to do so.

What happens if I owe back taxes in Wisconsin?

Some older tax debts may be dischargeable, but recent ones typically are not. Both federal and state income tax rules determine whether a tax debt qualifies for discharge.

How do I know which debts are safe to list in my filing?

It’s important to review your entire debt situation with a bankruptcy attorney. They can help you understand which debts can be discharged under Chapter 7 and which ones cannot.

Know Before You File

Chapter 7 bankruptcy offers powerful debt relief, but it’s not a cure-all. Certain debts, such as child support, recent taxes, and reaffirmed loans, will survive the process. By understanding which debts remain after Chapter 7, you can avoid surprises and plan smarter.

If you’re uncertain about how these rules apply to your situation, the team at Debt Advisors Law Offices can provide clear, honest guidance. Speaking with an experienced Wisconsin bankruptcy attorney can help you understand which debts may be discharged and which ones will remain.

Schedule a free consultation today to discuss your debts, learn which ones may qualify for discharge, and take the first step toward regaining control of your financial future.