Can Secured Debt Be Discharged in Bankruptcy?

Federal law provides debtors with the ability to discharge (i.e., eliminate) certain types of debts through bankruptcy. However, not all debts can be discharged in bankruptcy. For example, secured debts—which are debts that are backed by collateral—generally cannot be discharged in bankruptcy. This means that if you have a secured debt, you will still be responsible for repaying that debt even if you file for bankruptcy.

There are some exceptions to this rule, however. For instance, if the collateral for a secured debt has been sold and the proceeds from the sale were used to pay off the debt, then the debtor may be able to have the remaining balance of the debt discharged in bankruptcy.

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