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Getting Debt Discharged in Chapter 13 Bankruptcy

Posted By Allmand Law Firm, PLLC || 23-May-2013

Many people who think about getting debt discharged may assume it can only be erased through Chapter 7 bankruptcy . In fact, Chapter 13 bankruptcy has the ability to not only discharge debt, but in some cases may help eliminate debt that is not eligible for discharge in Chapter 7. Meaning, you may be given a greater advantage in Chapter 13 when it comes to wiping out debt.

When a discharge is received in Chapter 13 bankruptcy, it comes after the debtor repays a portion of the debt. How much paid toward outstanding debt may depend on income and expenses of the debtor. Debt considered as a non-priority or unsecured may not need to be repaid in full. The length of a Chapter 13 case could be anywhere from 3 to 5 years, but if you follow your repayment schedule successfully, any remaining amount unpaid may be granted a discharge.

Non-priority unsecured debts include personal loans, credit card debt, medical bills, and in some cases, qualifying tax debt. For secured debts, such as a mortgage or vehicle loan, you may be able to have liens stripped or reduced depending on the collateral. A vehicle may qualify for a "cram down" if the collateral is worth less than the amount due on the loan agreement.

Chapter 13 bankruptcy may help discharge debt that is considered non-dischargeable in Chapter 7 such as obligations related to a divorce decree, separation property settlement, taxes, and willful or malicious property damage claims.

Reference: http://www.nolo.com/legal-encyclopedia/debt-discharged-end-chapter-13-bankruptcy.html

Categories: Chapter 13 Bankruptcy
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