Debts that may not be discharged in Chapter 13 bankruptcy

Some New York residents may be familiar with how the bankruptcy system works. By filing for bankruptcy protection from creditors, some or all outstanding debts may be discharged upon the completion of the process. However, there are some obligations that will be unaffected. For instance, those who owe back taxes, spousal support or child support will still owe that money even after the case has been resolved.

For those who owe child support, filing for bankruptcy may put a stop to collection efforts on a temporary basis. This is because the court may place a stay on any attempt made by a creditor to seize property from an estate. In a Chapter 13 case, a debtor’s income is considered part of the estate. In some cases, the stay will be lifted unless the proposed repayment plan adequately addresses spousal or child support that is owed pursuant to an existing court order.

Debts that extend beyond the length of a repayment plan may not be discharged in a Chapter 13 bankruptcy. Mortgage debt is an example that is not typically discharged. Student loans guaranteed by the federal government are generally not eligible for discharge through bankruptcy, but there are exceptions to that rule. If a court believes that repaying the loans would constitute an undue hardship, the debtor may be relieved of having to make any future payments.

Anyone who is burdened by overwhelming financial obligations may wish to consider bankruptcy as an option. An attorney can explain the eligibility and other requirements that must met before filing for Chapter 13. In some cases, however, there may be other debt relief alternatives that may be more appropriate.