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Which kinds of debts stay after a Chapter 13 bankruptcy?

While a Chapter 13 bankruptcy can help you pay down your debts over time, the fact is that not all kinds of debts can be reduced or eliminated. There are exceptions to the Chapter 13 discharge rules, and those can affect you, particularly if those exceptions are the reason you want to file.

One of the major items you can't discharge in bankruptcy is child support, since it's considered to be an obligation ordered by the court. Spousal support can't be discharged either. While Chapter 13 bankruptcy won't allow you to discharge these debts, the collection activities for these debts may be temporarily postponed.

Under Chapter 13 bankruptcy, the bankruptcy code allows for creditors to collect child support or alimony from a person going through bankruptcy. However, there is a catch. While in Chapter 13 bankruptcy, a person's earnings become property of the estate. According to the law, creditors can't collect child support or alimony from property of the estate.

Because of this wording, it's possible to get child support or alimony stayed at least temporarily. However, if a judge determines that the debtor's Chapter 13 bankruptcy plan doesn't adequately account for child support or alimony in the future, he may lift the stay, making the debts due immediately.

Domestic support payments are very specifically exempted from discharge, and your Chapter 13 bankruptcy could even be dismissed if you don't pay your obligations. This is something to consider if you were thinking this kind of bankruptcy could help you with these obligations, because in fact, they are debts that can overturn your entire bankruptcy if they're not maintained properly.

Source: FindLaw, "Debts that Remain After a Chapter 13 Discharge," accessed April 05, 2016

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