How much of my debt will be discharged?

Chapter 13 bankruptcy allows you to catch up on missed mortgage or car payments and restructure your debts through a repayment plan. When you complete your program, you will receive a Chapter 13 discharge order that eliminates the remaining balance of qualifying debt.  What exactly does the term “discharge” mean here? Discharge of debt means you are no longer responsible for repaying remaining debt. The creditors can no longer attempt to collect from you.

In a Chapter 13 bankruptcyunlike in a Chapter 7 bankruptcy, you commit to repaying an agreed-upon portion of your debts over a duration of three to five years. So long as you meet the terms of your approved agreement, you are allowed to keep your otherwise non-exempt assets, and at the end of the term, your remaining debts are then discharged.

Other Benefits of Chapter 13 Bankruptcy

Chapter 13 gives individuals numerous advantages over, for example, liquidation under Chapter 7. Chapter 13, for instance, has great advantages for homeowners in that it offers individuals the opportunity to save their homes from foreclosure. Delinquent mortgage payments can be remedied, and foreclosure proceedings halted. It is important to note that during the Chapter 13 repayment plan (which we will discuss later on), all mortgage payments must be paid on time. You can extend the rescheduled payments over the three-to-five-year repayment plan which as a result, may lower the payments.

Additionally, Chapter 13 bankruptcy offers protection for many co-signers who may have suffered because of the debtors’ delinquencies.

Lastly, what may be the greatest relief for many debtors is no longer having to deal with creditors altogether as the designated Chapter 13 trustee will be the one dispersing payments to creditors and not the debtor.

What types of debt are considered qualifying?

The most common types of non-priority unsecured debts you can discharge via Chapter 13 bankruptcy include debts like ordinary credit card debt, personal loans, medical bills, many lawsuit judgments, and utility bills. These are all eliminated with your Chapter 13 discharge. 

What debts are not covered by Chapter 13?

Debts that generally are not dismissible by way of Chapter 13 and you are still responsible for paying, are as follows: most student loans (these are rarely released), all child support, spousal support, debts that stem from death or a personal injury caused by driving while intoxicated or under the influence of narcotics, and debts for restitution or criminal fines included in a sentence which appears on the debtor’s conviction of a crime. If these are not paid in full by the end of the Chapter 13 repayment plan, the debtor will still be obligated to pay the debts mentioned above. 

Is it difficult to file for Chapter 13 bankruptcy?

The process is complex, and you must be organized and plan ahead when navigating a Chapter 13 bankruptcy process; however, the results can be relieving, fulfilling, and very freeing. The most complicated portion of Chapter 13, aside from completing all necessary steps, forms, and the general filing process, is forming your Chapter 13 repayment plan as there is no standard form to do so. The repayment plan specifically outlines to creditors how much you will pay to each one. 


Missed debt payments, defaults, credit card debt, repossessions, and lawsuits can all cripple your credit which overall may be more troublesome to explain to a future lender than bankruptcy. 

 

The success rate when it comes to completion of Chapter 13 bankruptcy filers, repayment plans, and cancelation of remaining debts, positively increases when an individual or business works on each step with an attorney. The best advice is to contact an experienced bankruptcy attorney before starting the process (particularly an attorney specializing in Chapter 13 Bankruptcy). If you are contemplating Chapter 13 bankruptcy, contact The Moorhead Law Group at 303-447-1400 and schedule a consultation with one of our attorneys.

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