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Do You Have to Repay What You Owe in Bankruptcy or Can I Eliminate All Debts?

Posted By Allmand Law Firm, PLLC || 24-Apr-2014

Do You Have To Repay What You Owe In Bankruptcy?

Do You Have to Repay What You Owe in Bankruptcy ?

The answer depends on which chapter you file. Chapter 13 bankruptcy is court-approved repayment plan that helps debtors make affordable payments on debt obligations. Chapter 7 bankruptcy can eliminate qualifying debts through a discharge approved by the court. Once you have a better idea where you stand with your finances and how you qualify for bankruptcy, you will know which chapter is the best solution.

Chapter 13 is a repayment plan that often lasts 3 to 5 years. It is based on the debtor's ability to make payments by reviewing monthly earnings. If you do not qualify for Chapter 7, have non-exempt property you want keep, or have debts not eligible for discharge, this chapter can help.

Debtors who want to bring their mortgage current after falling behind on payments to avoid foreclosure benefit from filing Chapter 13. You can prevent repossession of your vehicle if you are behind on loan payments. You may be able to reduce the principal value of the vehicle depending on how long you owned it. Back taxes, child support, and alimony payments can also be made through this plan.

Chapter 7 bankruptcy may allow for debts to be wiped out or eliminated if they are considered unsecured debts. Examples include medical bills, credit card debt, personal loans, payday loans, and other debts. Both chapters can help you protect assets from creditors, but Chapter 7 can help you liquidate assets to pay creditors if this is an option. If you have any questions about the bankruptcy process feel free to contact us today for a free consultation.

Reference: http://blog.credit.com/2014/04/will-bankruptcy-wipe-out-my-debt-80085/

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