Behm Law Group, Bankruptcy Attorneys

The benefits of filing for bankruptcy vary between the different chapters. If you choose to file for Chapter 7 bankruptcy, you benefit from the fresh start it provides after your discharge order is issued by the court in about ninety to one hundred and twenty days. If you choose to file for Chapter 13 bankruptcy, you benefit from a restructuring of your debts into a manageable repayment plan and you will receive a discharge order discharging your debts after your repayment plan is concluded in three to five years. However, for individual consumers filing for either chapter, there is some overlap of the different benefits each type of bankruptcy provides. If you are considering filing for Chapter 13 bankruptcy in Redwood Falls, MN, Behm Law Group, Ltd. can help you find ways to gather benefits that you might get during a Chapter 7 case as well.

A Chapter 13 bankruptcy is designed to restructure your debts into a new repayment plan that will last from three to five years. A common misconception about this restructuring is that the filer will continue to repay all of one’s debts in full over the payment plan period. This is true in some cases but most debts will only be partially paid.

Debts Discharged

While all of your priority unsecured debts, such as most tax debts and child support debts, must be paid in full in a Chapter 13 case, there are some nonpriority unsecured debts that will only be partially paid and then the balance will be discharged.

1. Personal Loans: Any personal loans from friends, family, or acquaintances are considered unsecured nonpriority debts. These “loose contract” loans will be only partially paid with Chapter 13 bankruptcy; however, if they are secured by property or other assets, the creditors may take back those assets if you do not pay the loans back.
2. Credit Card Debt: This is the most common type of unsecured nonpriority debt that filers hold when entering bankruptcy. With Chapter 13, that credit card debt can be wiped out after being partially paid through the chapter 13 repayment plan.
3. Some Tax Obligations: The majority of your tax debts must be repaid at a decided percentage with your Chapter 13 repayment plan. However, if you have very old tax debts, they can be considered nonpriority unsecured debts and be discharged with Chapter 13.
4. Medical Bills: Medical bills can be crippling, but when you file for Chapter 13 bankruptcy, those debts will be discharged if they were accumulated when your insurance did not completely cover your medical care.
5. Other: If there is a judgment against you for negligence or contract breach involving a certain nonpriority unsecured debt, it’s possible such a debt can be discharged in Chapter 13. Debts involving injury to another person caused by drunk driving will not be discharged.

If you are considering filing for Chapter 13 bankruptcy in Redwood Falls, MN, or if you are struggling with these kinds of debts among other financial obligations, Behm Law Group, Ltd. can help. Contact us at (507) 387-7200 today for information about how bankruptcy can work for you.