Chapter 13 Bankruptcy can be a useful legal tool for those in serious financial trouble. It allows the filer to do a number of things that he or she can’t do in a chapter 7 bankruptcy. A number of its potential benefits are listed elsewhere in the blog.
Despite all the good things you can find about chapter 13 bankruptcy, it does have its shortcomings.
An important one?…it doesn’t “discharge” or wipe away every type of debt.
All non-dischargeable debts are designated as such for public policy reasons, so if you have a problem with one of them, call your congressional representative.
The following is the short list of the most common types:
1. Unlisted Debt – Every debt needs to be disclosed in both a chapter 13 and chapter 7
2. Debts for death or personal injury caused during the driving of a car, “vessel”, or aircraft, while intoxicated – Remember…” designated driver”.
3. Debts for Spousal Maintenance or Child Support – Debts related to the property settlement agreement may be discharged in chapter 13.
4. Certain Tax Debt – certain taxes are dischargeable. Surprise! Surprise!
5. Criminal Restitution or Fines Related to the Conviction of a Crime. This makes sense.
6. Student Loan Debt – Unless the Debtor qualifies for a “hardship” exception…It is possible, but…
7. Debts related to embezzlement or larceny – I don’t have anything for this one.
8. Debt related to property damage as a result of “willful or malicious” conduct
9. Debts incurred during the plan that weren’t included – It may be possible to pay a post-filing debt through the plan.
10. Debts that are owed to a creditor who didn’t get a notice of the Bankruptcy filing –