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Which debts cannot be discharged in a chapter 13 bankruptcy?

Filing for a chapter 13 bankruptcy in Chicago is particularly advantageous if you are in a position to pay off some of your debts. Through this option, you can work with creditors to develop a plan to pay them in installments. You may be able to save your home from foreclosure, reschedule your secured debts and lower the payments on your outstanding balances.

Your qualified debts will be discharged as long as you follow the requirements of a chapter 13 filing. Those include taking a financial management course and certifying that all payments have been made.

Despite these benefits, there are limitations to what this process can do. According to the U.S. Courts, there are several debts that will not be discharged in a chapter 13 bankruptcy, such as the following: 

  •        The mortgage on your home (though a second mortgage may be eliminated)
  •        Certain taxes, especially if the debt is less than three years old
  •        Most student loans
  •        Child support or alimony payments
  •        Fines or penalties related to criminal activity or a civil lawsuit regarding certain personal injury cases, such as drunk driving

Any debts that were occurred due to fraudulent activity or other personal injury matters could be eligible for discharge. However, the U.S. Courts notes that a creditor is able to file a motion to make the debt non-dischargeable.

Even if you have these debts, you should recognize that a chapter 13 filing could free up money to pay them because the amount you owe to other creditors may be lowered. When you file for bankruptcy, an automatic stay is placed on all your debts, allowing you to get your finances in order.

While this information may be useful, it should not be taken as legal advice.


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