If you’re struggling with overwhelming debt, filing for bankruptcy under Chapter 13 might be a viable option to help you get back on track. However, one of the most common questions people have is whether all of their debts will be wiped out if they file under this chapter.
The short answer is no, not all of your debts will be eliminated when filing for Chapter 13 bankruptcy. Here’s what you need to know about which debts can and cannot be discharged in a Chapter 13 case.
What Is Chapter 13 Bankruptcy?
Chapter 13 bankruptcy is often referred to as “reorganization” or “wage earner’s” bankruptcy. This type of bankruptcy allows individuals with regular income to restructure their debts over a period of three to five years through a court-approved repayment plan.
Under this type of bankruptcy, the debtor typically retains ownership and control over their assets while repaying creditors according to an agreed-upon plan. Unlike Chapter 7 bankruptcy where unsecured debts are usually wiped out completely, in Chapter 13, the debtor repays some or all of their debt over time through the repayment plan.
Which Debts Can Be Discharged in Chapter 13 Bankruptcy?
While not all debts can be discharged in a Chapter 13 case, there are some types that can be eliminated through the repayment plan. These include:
Credit card debt – Unsecured credit card debt can sometimes be discharged in a Chapter 13 case depending on the specifics of your situation. However, it’s important to note that if your credit card debt was incurred within three months prior to filing for bankruptcy, it may not qualify for discharge.
Medical bills – Medical bills are another type of unsecured debt that may qualify for discharge under certain circumstances.
Personal loans – If you have personal loans from family or friends that aren’t secured by collateral such as property or vehicles then these also could potentially qualify for discharge within approved payment schedules set forth during proceedings themselves!
Past-due utility bills – Utility bills past due at time of filing could potentially qualify for discharge but only as long as utility services aren’t terminated before confirmation hearing takes place soon thereafter; otherwise these would become non-dischargeable since utilities should remain current throughout the entirety of proceedings involved with chapter thirteen guidelines.
Which Debts Cannot Be Discharged in Chapter 13 Bankruptcy?
There are some types of debts that cannot be eliminated through a Chapter 13 repayment plan. These include:
Secured debts – Secured debts like mortgages and car loans cannot be discharged through a Chapter 13 repayment plan unless those payments were missed prior to filing thereby making them subject to repossession or foreclosure proceedings etc., which would trigger legal collection efforts outside scope offered by chapter thirteen guidelines themselves!
Student loans – Student loans cannot generally be discharged in either chapter seven or thirteen bankruptcies unless certain conditions apply such as proof undue hardship being present (very difficult standard) among other more stringent requirements!
Certain taxes – Some tax debts cannot be discharged in a Chapter 13 case depending on the specifics regarding timing and nature / types thereof associated with said outstanding balances owed towards government entities involved!
Child support and alimony payments- Court-ordered child support and alimony payments must continue during and after your bankruptcy case has been concluded as part of ongoing obligations required by law itself.
Filing for bankruptcy under any chapter can help provide relief from overwhelming debt but it’s important to understand which types of debt can and cannot be discharged before deciding which type is right for you! In general though, most unsecured debts like credit cards or medical bills could potentially qualify while secured ones like mortgages/car loans do not unless specific conditions met along with student loan/tax obligations being very difficult proving undue hardship exists making them eligible candidates too! It’s essential to consult an experienced Montgomery bankruptcy attorney familiar with laws governing bankruptcies within the jurisdiction where you reside so they can guide and make informed decisions throughout the entire process involved with filing under chapter thirteen guidelines themselves!