In a Chapter 13 bankruptcy, a debtor works with the court to develop a debt repayment plan that lasts anywhere from 3 to 5 years. At the end of the repayment plan, most remaining debts are eliminated by the court. However, some debts will not be discharged. While the debtor will make manageable payments on these debts during the repayment period, once the judge orders the discharge, the client will still be obligated to pay off the amounts.
For example, in many cases, it is not possible to discharge student loans. There are exceptions to this, but it is the responsibility of the debtor and their attorney to show the court why these debts should be discharged. Courts have different standards for determining whether student loans should be discharged, but a debtor may be expected to show they simply cannot afford the payments and may not ever be able to do so.
Some people choose Chapter 13 bankruptcy because they do not want to give up their homes. As a result, mortgages may not be dischargeable in bankruptcy, and the homeowner continues to make payments as usual. Another type of non-dischargeable debt is debt acquired through the reckless or criminal actions of the debtor. The debtor cannot discharge fines or restitution required after a ruling in a criminal case. Finally, debtors cannot eliminate child or spousal support obligations in bankruptcy.
Individuals who are thinking about bankruptcy may benefit from talking with a bankruptcy attorney. This may be particularly true if the individual has nondischargeable debt. The attorney may be able to review the client's financial situation and assist the client in making a decision about whether bankruptcy is an appropriate course of action.