Filing for bankruptcy gives people the opportunity to achieve financial relief. Chapter 7 and Chapter 13 bankruptcy are two different options people have when seeking debt relief. If you’re considering filing for bankruptcy, you might not be sure which type of bankruptcy is best for your unique situation. Our Indianapolis bankruptcy attorneys explain what debts are discharged in Chapter 7 and Chapter 13 bankruptcy so that you can determine which bankruptcy is best for you.
If you have questions about filing for bankruptcy or you need legal guidance, get in touch with our Indianapolis bankruptcy attorneys today to schedule a virtual consultation!
Chapter 7 Bankruptcy
The primary purpose of filing for Chapter 7 bankruptcy is to discharge (wipe out) debts. When you file for Chapter 7 bankruptcy, it releases the debtor from the responsibilities of paying back that debt. It also prevents the creditor from taking any collection actions against the debtor— including creditor harassment.
Although the debtor won’t have to pay back some debts under Chapter 7 bankruptcy, there is a valid lien that remains. This means that since your debts get discharged, the creditor has the right to repossess items. For example, if your car loan debts get removed, you won’t get to keep your car.
Debts Discharged in Chapter 7 Bankruptcy
There are a wide variety of debts that can be discharged under Chapter 7 bankruptcy.
Below is a list of the most common dischargeable debts:
- attorney fees (except child support and alimony awards)
- auto accident claims
- business debts
- civil court judgments
- collection agency accounts
- credit card charges
- medical bills
- money owed under lease agreements
- personal loans from friends, family, and employers
- repossession deficiency balances
- revolving charge accounts
- social security overpayments
- student loans
- tax penalties and unpaid taxes past a certain number of years
- utility bills (past due amounts only)
- veterans assistance loans and overpayments
Chapter 13 Bankruptcy
Chapter 13 bankruptcy allows people with a regular income to develop a repayment plan with creditors. People then make installments to creditors over three to five years. When a person completes their Chapter 13 repayment plan, they receive a discharge order that will wipe out the remaining balance of qualifying debt. Chapter 13 bankruptcy provides people with an even broader discharge than Chapter 7 because it wipes out some debts that aren’t dischargeable in Chapter 7.
Debts Discharged in Chapter 13 Bankruptcy
Below are some of the most common types of debts dischargeable in Chapter 13 bankruptcy:
- Breach of contract or negligence-related debt
- Credit card debt
- Medical bills
- Older tax obligations
- Personal loans not secured by collateral
Below are some of the debts that will get discharged in Chapter 13 but not in Chapter 7 bankruptcy:
- Willful and malicious property damage
- Debts incurred to pay nondischargeable taxes
- Certain debts arising out of divorce or separation property settlement
- Post-petition homeowners’ dues
- Government fines, penalties, and forfeitures
- stripped or crammed-down liens
- Other unusual debts
When Will I Receive the Chapter 13 Discharge?
To receive the Chapter 13 discharge, you need to pay back a certain amount of your debts through your repayment plan. The specific amount that you need to pay off will depend on your payment plan amount, the type of debt you owe, your property value, income, and expenses. Our bankruptcy attorneys can further explain how Chapter 13 discharge works.
Call Our Indianapolis Bankruptcy Attorneys Today: (888) 713-5148!
At Jackson & Oglesby Law LLC, our bankruptcy attorneys know your rights and can help you end and prevent debt problems. Our bankruptcy lawyers can help you get the clean start you need through either a Chapter 7 or Chapter 13 bankruptcy. We are devoted to providing compassionate guidance that can begin with a free bankruptcy evaluation. With our team, you can rest assured that we will help you from beginning to end.