Should You File Bankruptcy If You Have A Lot Of Non-Dischargeable Debts?

One of the first things a bankruptcy lawyer will look for, when meeting with a person who is considering bankruptcy, is the types of debts the person has. Attorneys classify debts in two categories, which are dischargeable debts and non-dischargeable debts. If you qualify for Chapter 7 and have mostly dischargeable debts, using this branch is usually the best option. If you have mostly non-dischargeable debts, you may need to use Chapter 13.

What is the difference between dischargeable debts and non-dischargeable debts?

The first thing you should understand is the difference between these two categories of debts. Debts that fall into the dischargeable category are debts that do not have any collateral and those that can be forgiven in a bankruptcy case. Examples of dischargeable debts include medical bills, credit card payments, and personal loans.

Debts that fall into the non-dischargeable category are debts you have to repay, as they will not be forgiven, or discharged, in a bankruptcy case. Example of non-dischargeable debts may include back taxes, student loans, alimony, child support, and other types of court judgements you are responsible to pay.

What should you do if you have mostly non-dischargeable debts?

If the debts you have primarily fall into the non-dischargeable debt category, filing for Chapter 7 is not going to offer a lot of relief to you. Because of this, you could try to work out repayment plans on your own with each creditor, or you could use Chapter 13 bankruptcy.

Chapter 13 bankruptcy is a commonly used option for people who owe a lot of money for non-dischargeable debts, and it offers relief in several ways. First of all, it provides you with a repayment plan for the debts that you can afford. Secondly, it gives you protection from your creditors, which means your creditors will not be able to contact you or pursue you for payments once the court accepts the repayment plan your lawyer created for you.

How long will it take?

If you decide to use Chapter 13 for debt-relief purposes, you will be tied to a repayment plan for either three or five years, and this will depend on your income compared to the income in your state. Once the plan is complete, you will have paid off a lot of the non-dischargeable debts you owe, and you will be in a better financial situation.

If you are interested in learning more about Chapter 13 or alternatives to this, talk to a bankruptcy lawyer today, such as Robert Bruce Jones Attorney.