Bankruptcy can offer critical financial relief, but not all debts are erased through this process. When it comes to what kind of loan debt is not alleviated when you file for bankruptcy, the law is clear: several types of debts typically remain, even after a successful bankruptcy discharge.
In 2025, the U.S. Bankruptcy Code continues to outline specific categories of non-dischargeable debt—debts that remain legally enforceable even after bankruptcy concludes. If you’re considering bankruptcy or advising someone who is, understanding these exceptions is essential.
Types of Loan Debt That Survive Bankruptcy
Not all financial obligations are eliminated in bankruptcy. Key categories of non-dischargeable debts include:
- Student loan debt: Unless you prove “undue hardship”—a high legal standard—student loan debt is not automatically wiped out in bankruptcy. As of August 2025, both federal and private student loans require a separate court action and finding of undue hardship to be discharged. This process remains demanding, and the majority of borrowers do not receive a full discharge. Without meeting the hardship standard, what kind of loan debt is not alleviated when you file for bankruptcy nearly always includes student loans.
- Debts from fraud or false pretenses: If money was borrowed through misrepresentation or fraud, this debt will not be discharged.
- Debts from willful and malicious injury to another: Obligations resulting from intentional harm—whether to people or property—remain non-dischargeable.
- Debts stemming from embezzlement, larceny, or breach of fiduciary duty: These are financial wrongdoings where the debtor acted in bad faith.
- Domestic support obligations: Alimony and child support debts are not erased through bankruptcy under any circumstances.
- Certain taxes: Most recent tax debts, including those for income or payroll, as well as taxes resulting from fraudulent activity, remain enforceable.
- Debts not listed in the bankruptcy filing: If a debtor fails to disclose a debt during bankruptcy proceedings, that debt is generally not discharged.
- Court fines and penalties: Criminal fines, restitution, and certain civil penalties survive bankruptcy.
Student Loan Debt in 2025: Alleviation Remains Limited
Student loan discharge through bankruptcy remains a headline issue in 2025. While recent Department of Justice guidance has slightly smoothed the process for federal student loan borrowers, the “undue hardship” requirement stands firm. This means a borrower must demonstrate extreme financial difficulty, ongoing hardship, and a good faith effort to repay. Courts still apply these standards strictly, and only a limited number of filers successfully shed their student loan debt through bankruptcy.
Alternatives for struggling student loan borrowers do exist—such as rehabilitation, consolidation, and negotiation outside of bankruptcy—but these do not erase the underlying debt. Collections on defaulted federal student loans resumed in May 2025, making prompt action vital for borrowers under financial strain.
Why These Debts Are Not Alleviated
Bankruptcy aims to balance giving debtors a fresh start with ensuring accountability for certain behaviors and responsibilities. Lawmakers have determined that some obligations, especially those involving fraud, family obligations, or societal penalties, should not be wiped out. For student loans, Congress believes federal student loans are essential for access to education and should only be dismissed in rare hardship cases.
Table: Common Non-Dischargeable Loan Debts in Bankruptcy
| Debt Type | Dischargeable in Bankruptcy? |
|---|---|
| Student Loans (absent undue hardship) | No |
| Alimony and Child Support | No |
| Fraudulent Loans | No |
| Willful/Malicious Injury-Related Debts | No |
| Tax Debts (Recent/Fraudulent returns) | No |
| Court-Ordered Fines | No |
| Regular Credit Card/Medical Debt | Yes |
| Car Loans (if asset surrendered) | Yes |
Recent Developments as of August 2025
Despite ongoing national debate, there have been no sweeping legal changes for what kind of loan debt is not alleviated when you file for bankruptcy as of August 2025. Legislative proposals and judicial guidance continue to generate headlines, but the core categories of non-dischargeable debts remain consistent with prior years. Notably, the Fresh Start program for defaulted federal student loans ended in late 2024, further limiting relief options for borrowers in bankruptcy.
If you’re facing bankruptcy or advising others, knowing which debts will persist—and why—remains critical for making informed decisions.
If you’ve had direct experience with bankruptcy and any of these debts, or have questions about the current legal environment, share your thoughts below to join the discussion.