Chapter 13 bankruptcy allows qualifying debt to be discharged when your case ends. Chapter 13 may wipe away or eliminate certain debts not eligible for discharge in Chapter 7 bankruptcy . While certain debts must be paid in full, the amount paid toward outstanding debt depends on your income and other monthly expenses.
Chapter 13 helps reorganize debt through a structured repayment plan approved by the court. In most cases, the monthly amount paid toward the debt is less than what was paid originally before your petition is filed. Chapter 13 has the ability to reduce monthly payments based on your income. Certain debts have priority in which they should be paid in full such as back income taxes and child or spousal support.
There are certain unsecured debts that may qualify for discharge at the end of your bankruptcy. Basically, any outstanding amount you have remaining at the end of your case gets discharged. Credit card debt , medical bills , personal loans and certain tax debt may be discharged at the end of your case. In some cases, a discharge is granted for certain judgments against you.
Chapter 13 may strip or cram down property liens. Secured loans that are backed by property, such as a vehicle loan, may be crammed down in which the debtor would make payments based on what the vehicle is worth. A lien that is stripped is considered unsecured debt and the remaining amount would be discharged at the end of your case.