Chapter 13 bankruptcy can be a crucial first step out of overwhelming financial difficulties. Chapter 13 allows people to reorganize their debts and develop a three-to-five year repayment plan.
Some debts can be discharged completely in Chapter 13 bankruptcy. However, some cannot be. Let’s look at a few kinds of debt that cannot be discharged.
Child and spousal support
A Chapter 13 bankruptcy won’t relieve a person of their court-ordered support obligations. However, it can stay collection activities on this support — at least temporarily. Bankruptcy laws place a priority on domestic support obligations.
Generally, if you got your student loan through a government program, as most people do, it won’t be dischargeable. The court may make an exception if you’re able to show that it’s causing undue hardship to you or your family. This is done by filing a hardship discharge.
If you’ve been assessed fines as part of a criminal conviction (such as a DUI), these aren’t dischargeable. The same is true for any restitution you may have been ordered to pay victims of any criminal actions.
Other debts, particularly those involving long-term obligations that extend past the length of your repayment period, may be eligible for discharge in Chapter 13. Your best course of action when considering personal bankruptcy is to discuss the two different types (Chapter 7 and Chapter 13) with an experienced bankruptcy attorney, determine which you qualify for and decide which best meets your goals. The more you understand what bankruptcy does and doesn’t do when you go into the process, the greater your chances are of completing it successfully.