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What debts can you discharge in bankruptcy?

On Behalf of | Jan 4, 2023 | chapter 13 bankruptcy |

Even though a Chapter 13 filing will lead to a repayment plan with the goal of repaying your debts, you may still discharge some debts in the process.

Once you complete the repayment plan, the court will remove any dischargeable debts. But it is important to understand that you cannot discharge all debts in bankruptcy.

Debts you cannot discharge

The court will consider which debts you can discharge and which you cannot when designing your repayment plan. You will usually work to repay the debts you cannot get rid of through bankruptcy. These include child or spousal support, tax debts, court fines and student loan debt. Most debts you cannot discharge because they are legal obligations, which are different from standard debts. Student loan debt is the exception. There is a law saying you cannot discharge that.

Debts you can discharge

All other types of debts are dischargeable. These will usually get low priority in your repayment plan if they are even included at all. They include things like secured debts and credit card debt. You can opt to let secured debts go, such as a home or auto loan, by letting the lender take the collateral securing the loan. Any remaining debt for such loans would then discharge in the bankruptcy.

Typically, the court will structure your repayment so you pay off debts that you cannot discharge first. Once you reach the end of your repayment plan, the court will discharge all dischargeable debt. But if there is debt remaining that is not dischargeable, you still are liable to pay it despite closing your bankruptcy case.

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