Vance P. Truman, Attorney at Law
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Some debts remain after Chapter 13 bankruptcy

There could come a point in your life when you realize that Chapter 13 bankruptcy is the only way to improve your finances. While there are a variety of benefits, including the ability to discharge some of your debts, there are exceptions.

Here are the types of debts that are not generally discharged via a Chapter 13 bankruptcy filing:

  • Child support and alimony: If you owe child support and/or alimony, you're expected to continue to make payments even after a Chapter 13 bankruptcy discharge. Furthermore, if you've fallen behind on payments, the court requires you to catch up. Filing for bankruptcy doesn't wipe clean these missed payments.
  • Student loans: Educational loans guaranteed by the government are not discharged in Chapter 13 bankruptcy. However, there is an exception. If the court rules that repaying the loans will impose a severe hardship, they may allow you to discharge some or all of the debt.
  • Criminal fines: For example, a Chapter 13 bankruptcy filing does not affect fines associated with a drunk driving arrest. You should expect to owe this money regardless of what happens during the bankruptcy process.
  • Some types of long-term obligations: For instance, a home mortgage may extend beyond the period of the repayment plan.

It's critical that you don't go into the Chapter 13 bankruptcy process assuming that you can discharge all your debt. While it's true that a bankruptcy filing can give you the fresh start you're looking for, don't look past the fact that some liabilities will remain.

Benefits of Chapter 13 bankruptcy

Even though Chapter 13 bankruptcy can't eliminate all of your debts, there are many benefits associated with filing:

  • Opportunity to save your home from foreclosure
  • Reschedule secured debts over the life of the repayment plan, thus resulting in lower payments
  • No more direct contact with creditors
  • Unlike Chapter 7 bankruptcy (10 years), Chapter 13 bankruptcy only remains on your credit report for seven years

If you're inching closer to filing for Chapter 13 bankruptcy, learn more about the pros and cons. This should include a clear understanding of what types of debt will remain after your repayment plan comes to an end.

Knowledge of the process and your legal rights in Ohio will allow you to make an informed decision as to what you should do next.

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