Chapter 13 has advantages and potential disadvantages compared to Chapter 7–it’s more flexible but there’s a chance you’ll pay more.
If a creditor doesn’t file a timely proof of claim on a debt in your Chapter 13 case, you pay nothing on that debt.
In some jurisdictions you can pay nothing to your “general unsecured” creditors, if all your money goes to paying higher priority ones.
Chapter 13 payment plans usually have you pay something to all of your creditors. But not necessarily. Certain creditors may get nothing.
The discharge of debts is just one of the tools of Chapter 13 for achieving your financial goals. It works differently than in Chapter 7.
There are various ways of dealing with debts that arise during the course of your Chapter 13 “adjustment of debts” case.
In most straightforward Chapter 7 cases all debts not secured by any collateral are discharged–forever written off. You pay nothing on them.
Bankruptcy can’t write off certain kinds of debts. Chapter 7 may give you enough help to avoid liens on your home from those debts.
Chapter 7 doesn’t write off any divorce-based debts. But Chapter 13 DOES write off non-support divorce debts.
Writing off a student loan in bankruptcy requires showing “undue hardship.” What is that?
When is it moral to break your promises to pay your debts?
Creditors will be a little less likely to challenge the writing off of recent uses of credit.
You know bankruptcy gives you an overall fresh financial start. But it can provide special fresh starts you may not know about.
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