Tag: mortgage

What debts are not discharged by bankruptcy?

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What debts are not discharged by bankruptcy?

Not all debts are discharged. In general, liens (such as mortgages and security interests in cars) are non-dischargeable as are some other types of obligations including:

(1) Federal, state and local tax claims (subject to specific time rules)

(2) Customs duties

(3) Spousal support

(4) Child support

(5) Most student loans

(6) Secured debts

(7) Fines and penalties imposed by government agencies

(8) Debts incurred due to false statements made with the intent to deceive

(9) Fraud committed in a fiduciary capacity, such as embezzlement or larceny

(10) Punitive damage claims for “willful and malicious” acts

(11) Debts not listed on the forms and schedules filed with the Court

(12) Drunk driving obligations

A non-dischargeable debt is one that will survive the bankruptcy proceeding. The debtor still has the obligation to pay this debt; the creditor has every right to collect.

That is why it is so important to consult with a bankruptcy attorney. Depending on your circumstances bankruptcy may or may not make sense for you. If after the bankruptcy you will be no better off then you were before, why do it?

(Reviewed 11.5.08)

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What is Chapter 13 bankruptcy?

thirteenth chapter bankruptcy-law

What is Chapter 13 bankruptcy?

Chapter 13, which has also been known as a wage earner’s plan, is an interest-free repayment plan where a debtor repays at least some of his or her unsecured debts with regular payments over five years. Under the new bankrtupcy law, effective for filings on and after October 17, 2005, more bankrtupcy filers will have to choose Chapter 13’s repayment plan because of the application of a complicated, two-part means test.

Generally the creditors expect to get more than they would have received from the debtor’s estate if the debtor had sought a complete liquidation under Chapter 7 Bankruptcy.

One of the important benefits of Chapter 13 is that the debtor generally can more easily continue to live in his or her home. If the debtor fails to comply with the Chapter 13 plan, the Court will usually dismiss the bankruptcy case

Another advantage of Chapter 13 is that it allows individuals to reschedule secured debts (other than a mortgage for their primary residence) and extend them over the life of the Chapter 13 plan. Doing this may lower the payments.

The disadvantage of Chapter 13 to the debtor is that the debts can linger for years, burdening future income.
(Reviewed 11.9.08)

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