If you are struggling with a large amount of debt, you are not alone. Many Americans have found themselves facing significant financial difficulties, which the pandemic has exacerbated. As you explore your debt relief options in New York, it’s natural to have questions about the bankruptcy process. For instance, what types of debts are dischargeable, and which are not? Here’s a brief overview of dischargeable (can be wiped away) and non-dischargeable (can’t be wiped away) debts under Chapter 13 bankruptcy.
Filing For Chapter 13 Bankruptcy in New York
First, it’s important to familiarize yourself with the Chapter 13 bankruptcy process. Also referred to as “wage earner” bankruptcy, Chapter 13 allows individuals with a regular source of income to gradually repay a percent of their debts over time (the rest is wiped away). This bankruptcy option allows individuals to stop foreclosure or repossession and maintain control of their possessions and property while making a monthly payment pursuant to a repayment schedule (typically lasting between three to five years). At the conclusion of the repayment period, most remaining debts will be discharged (wiped away).
Dischargeable vs. Non-Dischargeable Debt
The goal of bankruptcy is to help debtors obtain a “discharge” of debts, meaning they are released from personal liability for these debts. Both Chapter 7 and Chapter 13 bankruptcy allow most types of consumer debt, such as credit card bills and medical bills, to be discharged. However, some debts are more difficult—and sometimes impossible—to be discharged. For instance, child support or alimony payments are often considered non-dischargeable, as well as fines and penalties owed to government agencies. Some types of debts, like student loans and income taxes, can be harder to discharge.
Supporting You Through Every Step of the Bankruptcy Process
Even though bankruptcy exists to help individuals and families obtain a fresh financial start, many people still consider bankruptcy to be an embarrassing and even shameful process. If this stigma has prevented you from taking action, it’s time to discuss your situation with a trusted and compassionate New York bankruptcy lawyer. Together, you and your attorney will assess your situation and determine the most strategic path forward. You deserve a brighter financial future—get started with an understanding bankruptcy lawyer today.