economy
January 23, 2026
What is Rule 523 in bankruptcy?
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TL;DR
- Rule 523 lists debts that are not dischargeable in bankruptcy.
- This rule impacts both Chapter 7 and Chapter 13 bankruptcy filings.
- Common nondischargeable debts include most student loans, recent taxes, child support, alimony, and debts from fraud or drunk driving.
- Limited exceptions exist, such as proving 'undue hardship' for student loans or meeting specific criteria for older tax debts.
- Bankruptcy has long-term consequences, including impacts on credit scores and future borrowing ability.
- Debt settlement is an alternative that negotiates lower repayment amounts for unsecured debts.
- Debt settlement may have less severe credit consequences than bankruptcy and doesn't involve court proceedings.
- Debt relief programs may not assist with debts specifically covered by Rule 523, like student loans or tax obligations.
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