As previous posts in this blog have pointed out, Chapter 7 and Chapter 13 are the two main types of personal bankruptcy that you might consider if you are going through difficult financial challenges. As you know, Chapter 7 bankruptcy offers Fort Lauderdale residents a fresh start, as most debts are discharged and they get a clean slate. Chapter 13 allows you to repay your debts over a period of three to five years through a manageable repayment plan.
However, is it possible to have some of your debts wiped clean during a Chapter 13 bankruptcy as well? According to Bankrate, some people are not eligible for Chapter 7 bankruptcy, usually due to having a steady income that falls above a certain level. If your only option is Chapter 13, you may still wish to benefit from having some debts forgiven. Fortunately, some of your debts may be wiped out after you have completed your repayment obligation of up to five years.
First, your high-priority debts will be addressed in Chapter 13, such as your home mortgage, auto loans, credit cards and medical bills. You will also be required to fully repay such debts as child support, alimony, federal student loans and certain taxes. During the period when your repayment plan is being negotiated, the amount of some of your debts may be reduced. At the end of your repayment plan, the remainder should be discharged.
As you may see, Chapter 13 bankruptcy may offer you benefits that you might not have known about. It is important to understand that this information should not take the place of legal advice.