Michael D. Hart, P.C.

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Debts that may be discharged in a Chapter 13 bankruptcy

| Jun 7, 2018 | Chapter 13 Bankruptcy |

Filing either a Chapter 7 or Chapter 13 personal bankruptcy allows Virginia residents with overwhelming debt to take control of their financial situations and offers them the possibility of a fresh start. Filing a Chapter 7 petition may be the fastest and most straightforward way to escape crushing debts, but individuals with incomes that qualify them for this kind of debt relief sometimes choose to pursue Chapter 13 bankruptcy instead. This is because a Chapter 13 petition allows them to pay down their debts while retaining possession of assets like cars or homes that are secured by loans or mortgages.

Debtors may also choose to pursue Chapter 13 bankruptcies when co-signers are involved. Creditors may pursue cosigners for payment of debts owed by Chapter 7 petitioners, but they are not able to seek payment by these means when a Chapter 13 bankruptcy is filed. Debts that generally cannot be discharged in either a Chapter 7 or Chapter 13 bankruptcy include delinquent child support or alimony payments, past due homeowners association dues, and money that is owed to or guaranteed by the government such as unpaid taxes, fines and student loans.

However, individuals with particularly dire financial situations may petition the courts to include debts in their Chapter 7 or Chapter 13 petitions that are not usually dischargeable in bankruptcy proceedings. In order for these arguments to be successful, debtors must establish that they have made good faith efforts to pay the debt in a timely manner, they are unable to maintain even a minimal standard of living because of the debt, and their situations are unlikely to change in the near future.

Attorneys with bankruptcy law experience may be able to help individuals and families choose appropriate debt relief strategies. Attorneys might also dispel many of the myths surrounding personal bankruptcy and explain the differences between a Chapter 7 or Chapter 13 petition and alternatives like debt consolidation.