The full debt menagerie

Every debt has four properties that determine your real exposure: secured vs unsecured (collateral), recourse vs non-recourse (can they pursue beyond the collateral), personally guaranteed vs limited liability (does business debt become personal), and dischargeable vs non-dischargeable in bankruptcy.

Pick a debt type below to see all four properties and what happens if things go wrong.

The three bankruptcy chapters that matter to individuals

Chapter 7 — liquidation. Takes 4-6 months. Most unsecured debts get discharged. You may have to give up some property — but every state has exemptions (typically including homestead up to a limit, basic household goods, retirement accounts). Median Chapter 7 filer keeps most of what they had. Income limits apply.

Chapter 13 — wage earner reorganization. 3-5 year repayment plan. You keep all your property. You pay back as much as you can afford during the plan; remaining qualifying debt is discharged at the end. Used when income is too high for Chapter 7, or to save a house from foreclosure.

Chapter 11 — typically for businesses. Reorganization for businesses or wealthy individuals. Expensive and complex.

What survives bankruptcy (the "no escape" debts)

Most student loans (federal and private). Recent tax debt (within 3 years). Tax debt from unfiled returns. Child support, alimony. Debts incurred by fraud. Criminal restitution and most civil fines. Debts from intentional injury. Most government-backed loans (SBA loans through PG, FHA mortgages partially).

What happens at death

Your debts don't vanish — they become claims against your estate. The estate pays creditors before heirs receive anything. Your heirs are not personally liable for your debts in most states — UNLESS they were co-signed, joint accounts, or community property states (AZ, CA, ID, LA, NV, NM, TX, WA, WI) where surviving spouses may have liability.

Exception: Filial responsibility laws. About 30 states have laws that could make adult children pay for indigent parents' care. Mostly unenforced, but Pennsylvania notably enforced this in 2012.

Fleeing the country: doesn't work, mostly

Lenders sue, get default judgments, file UCC liens against property. If you ever return, the debt is waiting (with interest and penalties accruing). Federal debts (taxes, federal student loans) can result in passport denial. The IRS has reciprocal collection treaties with many countries. Banks abroad (under FATCA) report US person accounts to the IRS. Permanent expatriation requires formal renunciation, exit tax for high net worth, and doesn't erase pre-existing debts.