Debts That Survive Chapter 13 Bankruptcy
Chapter 13 Bankruptcy Background
Portland Bankruptcy Attorney
When monthly bills become overwhelming, many people consider filing for Chapter 13 bankruptcy as a way to take control of debt. This type of bankruptcy can be a powerful tool to restructure debts into a manageable monthly payment plan. However, not all debts can be wiped out in bankruptcy. In this case, it is important to know what debts survive chapter 13 bankruptcy.
During this difficult time, you need our credible Portland bankruptcy attorneys at Michael D. O’Brien & Associates PC, who can assist you or your business in reorganizing your financial situation. Contact us now and let our legal team go over all of your bankruptcy options with a free initial case evaluation.
Why Do I Need a Bankruptcy Attorney in Oregon?
A Chapter 13 bankruptcy petition offers a structured path for dealing with debt. Filing for a Chapter 13 bankruptcy case can give you a fresh financial start and can seem very attractive to people with debts they cannot afford to pay. However, the process can be complex and difficult to deal with on your own. You need a knowledgeable Portland bankruptcy lawyer on your side to help you understand how bankruptcy works and how it can improve your situation.
- At Michael D. O’Brien & Associates PC, we have more than two decades of experience helping Oregon families get a fresh start through Chapter 7 bankruptcy and Chapter 13 bankruptcy, preventing home foreclosures or car repossessions, stopping wage garnishment, and assisting in matters related to lien stripping and fair debt collection.
- We can help you make important decisions by reviewing your family’s whole situation, who you owe, and what you want to protect.
- We have an in-depth knowledge of the United States bankruptcy code, so we can explain your Chapter 13 bankruptcy filing and guide you in making informed choices about your future.
- We have helped individuals and families from Portland, Bend, Clackamas, Tigard, and nearby Oregon areas with affordable bankruptcy protection and asset protection strategies to solve debt and financial hardships. We serve the greater Washington, Multnomah, and Clackamas counties.
Whether it’s student loan debt or secured claims, let us put our extensive experience to work for you by helping you create an effective Chapter 13 plan. Contact us now and schedule a free case evaluation with our skilled Portland bankruptcy lawyers.
What is Chapter 13 Bankruptcy?
A Chapter 13 bankruptcy is also called a “wage earner’s plan” or a “debtor’s repayment plan.” It allows individuals with a steady income to propose a plan to repay all or part of their total debts. Under Chapter 13, the court approves a repayment plan that allows you to consolidate and pay down debt over three to five years. With help from our qualified Portland Chapter 13 bankruptcy attorney, you can make regular payments and keep most of your current possessions.
Chapter 13 is a reorganization type of bankruptcy where a person has a monthly payment that goes to a bankruptcy trustee. The trustee’s job is to collect funds and repay your creditors according to a Chapter 13 repayment plan. The plan depends on many factors, including your disposable income.
Furthermore, Chapter 13 offers individuals several advantages over liquidation under Chapter 7. Perhaps most significantly, Chapter 13 bankruptcy offers individuals an opportunity to save their homes from foreclosure. By filing under this chapter, individuals can stop foreclosure proceedings and may cure delinquent mortgage payments over time with Chapter 13 plan payments.
What Debts Survive Chapter 13 Bankruptcy?
After you complete your Chapter 13 plan, some of the remaining debts won’t be discharged. Regardless of your income or circumstances, certain debts survive Chapter 13 bankruptcy. If you’re considering filing for bankruptcy Chapter 13, it is crucial to seek legal advice from a top-ranking Portland OR bankruptcy attorney who can help you understand the scope of the bankruptcy discharge.
Chapter 13 bankruptcy will not discharge debts based on fraud, theft, or breach of fiduciary duty. The only time this type of debt will be discharged is if the creditor does not come forward to establish the fraud in the bankruptcy court.
Student loans or educational loans guaranteed by the United States government are also generally not discharged by a Chapter 13 bankruptcy. However, they may be dischargeable if the court finds that paying off the loan will impose an undue hardship on debtors and their dependents.
Debts Arising From Your Willful or Malicious Actions
If a creditor obtains a judgment against you in civil court for personal injury or death caused by your willful or malicious act, the judgment will be non-dischargeable. Willful and malicious means deliberate and without just cause. Note that the act which gives rise to the debt need only be willful or malicious to be non-dischargeable in Chapter 13, which greatly expands the types of debt that will survive discharge.
Domestic Support Obligations
Domestic support obligations are simply debts incurred before or after bankruptcy that fulfill the following requirements:
- They are, by their nature, alimony, child support, or maintenance.
- They are owed to your current or former spouse, child, or a government entity.
- The obligation should be established as part of a divorce decree, separation agreement, property settlement agreement, court order, or administrative determination.
Child support and alimony you owe directly to an ex-spouse or child are non-dischargeable in both Chapter 7 and Chapter 13 bankruptcies. It will also account for 100% of your repayment plan.
Debts or Creditors You Don’t List
In general, debts that are not listed in a Chapter 13 case survive bankruptcy. When filing for bankruptcy, you are required to list all your creditors and provide their most current addresses. However, if you forget to list a creditor on your bankruptcy papers or carelessly misstate a creditor’s identity or address, the court won’t notify the creditor, and the debt will almost always survive your bankruptcy.
The general rule concerning big fines and court costs in criminal cases is that fines issued against debtors as punishment for the crime are not dischargeable. Debts you owe on fines or restitution orders contained in the sentence for conviction of any crime may not be discharged in Chapter 13.
Recent income tax debts are those debts that first became due within three years before your filing date. These are considered priority debts and must be paid in full in any Chapter 13 plan.
If your Chapter 13 ends prematurely for any reason, the tax debts you have not yet repaid will remain. In this situation, you will either have to convert your Chapter 13 to a Chapter 7 bankruptcy or pay them outside of filing bankruptcy.
Intoxicated Driving Debts
If you operate a vehicle while illegally intoxicated by alcohol or drugs, and you injure or kill someone, any debt arising out of the injury is not dischargeable. The judgment against you won’t be discharged if the bankruptcy court determines that you were proven intoxicated.
This rule applies only to personal injuries. Debts for property damage resulting from your intoxicated driving are dischargeable.
Big Fines or Penalties Owed to a Government Agency
If you have been subjected to a penalty, forfeiture of property, or fine by a government agency for some reason, this type of debt will not be discharged in Chapter 13 bankruptcy. In some cases, if the government agency assesses the fine because you were overpaid benefits due to your failure to report income or for some other faulty behavior, only the fine itself is not dischargeable. The amount you were overpaid is dischargeable like any other unsecured debt. However, if the government agency files a court action alleging that you obtained the overpayment through fraud, the court can rule that the overpayment is not dischargeable.
Call Our Seasoned Portland Bankruptcy Attorneys Now!
Deciding to file a Chapter 13 bankruptcy case in Oregon can be overwhelming. If you are afraid of losing your home or car due to debt, or you have debts that will take decades to repay, this type of bankruptcy chapter can be one of our best options. Dealing with remaining debt involves many delicate and important decisions. If you understand your rights, you can resolve your debt problems while still preserving some important assets.
Before declaring bankruptcy, it is important to know and understand how the Chapter 13 case can help solve your financial problems. Our experienced Portland personal bankruptcy lawyers at Michael D. O’Brien & Associates PC can help you fully understand what you will be getting into when your Chapter 13 filing. If you’re overwhelmed by tax debt, medical bills, and credit card debt, we are here to help you find debt relief! You can also ask us about bankruptcy exemptions or how bankruptcy can affect your credit report and credit score.
Our bankruptcy law firm has extensive experience in representing clients in a wide range of bankruptcy cases. We can help you make critical financial decisions, prepare the necessary paperwork, and walk you through bankruptcy procedures. Contact us now and schedule a free case evaluation with our Oregon bankruptcy attorneys. We’ll help you deal with both unsecured and secured debt.