Does Chapter 13 bankruptcy discharge all your debts?

Realizing that you have too many debts and not enough income is a tough position to be in. You may consider filing for bankruptcy if you’re in that spot. Some people will file Chapter 13 bankruptcy, which is informally known as a wage earner’s bankruptcy. 

In a Chapter 13 bankruptcy, you have to make periodic payments to the bankruptcy trustee to cover some of the debts that you owe. Many of those debts will be discharged once you’re done with the bankruptcy case. There are some that won’t be eliminated when the bankruptcy is discharged by the court. 

What debts aren’t forgiven by a Chapter 13 bankruptcy?

Long-term debts, such as your home loan, won’t be forgiven by the bankruptcy because they’ll last beyond the bankruptcy term. They may be restructured. Other debts that aren’t discharged by a Chapter 13 bankruptcy case include:

  • Liabilities for drunk driving lawsuits
  • Loans that were taken out for education
  • Spousal support or child support obligations
  • Fines for criminal charges
  • Restitution to victims of a crime

It’s critical to include all your debts in the bankruptcy. Ones that aren’t included in the case won’t be discharged when the bankruptcy concludes. This means that you’d still be responsible for paying for them even when others are forgiven. 

Making sure that you understand how your debts will be handled in bankruptcy is critical so you can make plans to address everything. You have responsibilities and rights during this process. Working with someone who’s familiar with personal bankruptcy may help you to get through the legal process without having to deal with undue stress. 

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