If you’re having trouble paying off the debts you owe, filing for bankruptcy might help you get back on track. In a Chapter 13 bankruptcy, your debts are reorganized into an affordable repayment plan that lasts three to five years. This option typically allows for a broader discharge of debts than Chapter 7 bankruptcies. If you’re wondering whether this might help you, here’s an overview of debts that are reduced or eliminated through this procedure.

Secured Debts That May Be Minimized 

Generally, filing for bankruptcy won’t be able to get rid of secured debts backed by collateral, including car loans and mortgages. However, Chapter 13 bankruptcy provides exceptions under certain conditions.

If you have multiple mortgages and the amount you owe from the first exceeds the value of your property, you might be able to remove the second loan through a process known as lien stripping. This will reduce the loan to match the property value, reclassifying it as an unsecured debt. In turn, it will become eligible for discharge when your case is over.

Unsecured Debts That Can Be Eliminated

After you’ve met the terms of your repayment plan, any remaining balances you owe on unsecured debts may be completely discharged. This means the rest of your obligations will be canceled and the creditors will no longer have claims against you. Unsecured debts include medical expenses, credit card bills, utility payments, personal loans, older tax obligations, and breach of contract or negligence-related judgments.

You can also use this type of filing to wipe out balances that might still exist if you filed for Chapter 7 bankruptcy. In many cases, debts incurred due to willful and malicious property damage, divorce or separation settlements, and nondischargeable tax payments can also be eliminated. 

For help determining if Chapter 13 bankruptcy will give you the debt relief you seek, turn to John D. Wieser, Esq., PC. Backed by nearly two decades of legal experience, he is well-versed in this area of the law and will work diligently to provide you with the results you desire. He has guided countless Rochester, NY, residents through the bankruptcy process smoothly and successfully. Call (585) 328-0660 to schedule a consultation, or visit his website for more information on the services he offers.