Do you need to use bankruptcy to discharge some of your debts? If so, you may be looking into Chapter 13 bankruptcy. It allows you to combine many of your debts so that you can pay them back in a repayment plan to manage them at a lower interest rate, and many unsecured debts will be discharged. However, there will be debts that cannot be discharged and won't be put into that repayment plan. Here are those debts that you need to be aware of.
Student Loan Debt
While a student loan debt is unsecured, it is not typically discharged as part of Chapter 13 bankruptcy. There are some unique situations where the debt can be discharged, but it typically requires having a unique financial hardship that makes it impossible to pay back your student loan. For example, if you suffered a permanent injury that makes you unable to work, you could be in a situation where you are simply unable to pay off the debt because you cannot find employment. This could help that student loan debt qualify to be discharged.
Your mortgage is designed to be paid back over as many as 30 years, which is why it isn't included in a repayment plan, which is typically paid back in 5 years. You will continue making regular monthly payments to your lender until your loan is paid off. However, it is possible to have those months of missed mortgage payments included in your repayment plan. Your bankruptcy lawyer can help walk you through the complications of managing your mortgage to ensure that you keep your house and you are able to stay current with monthly payments.
Auto Loan Balance
Your auto loan is treated in the same way as a mortgage. The remainder of the loan cannot be put into a repayment plan, and you must continue to make monthly payments if you want to keep your vehicle. The good news is that you will not have to sell your car as part of a Chapter 13 bankruptcy.
Did you get a credit card with the help of a co-signer? Be aware that the debt you are unable to pay back on that credit card will not be discharged through a Chapter 13 bankruptcy. You will be clear of the debt, but it will then belong to the co-signer. This is a risk that the co-signer took on by helping you get a credit card, so it should be an expected consequence.
To learn more about chapter 13 bankruptcy, contact a bankruptcy attorney in your area.