One of the benefits of filing for Chapter 13 bankruptcy in Pennsylvania is that certain debts can be wiped out. This can provide much-needed relief to debtors struggling to make ends meet. But, not all debts can be discharged; the debtor must repay them regardless of their circumstances.
Bankruptcy courts have determined that some debts are so important to society or the debtee that they cannot be discharged. For example, no matter how difficult things are, your child would still need to eat, go to school and have something to wear, so the court cannot dismiss child support payments. Other examples of nondischargeable debts in Chapter 13 bankruptcy include:
- Student loans
- Taxes owed to state or federal government
- Fines and penalties imposed by government agencies
- Most criminal restitution orders
Further, if you took out a loan and used collateral to secure it, you cannot have that debt discharged unless you surrender the collateral. So, if you filed for Chapter 13 bankruptcy but kept your car, you would still be responsible for any auto loans used to purchase the vehicle.
Debts you can discharge in Chapter 13
When you stick to your repayment plan and satisfy the terms of your bankruptcy, the court can forgive some of your debts. Although the law doesn’t explain which ones exactly these are, most commonly wiped out debts include:
- Credit card balances
- Debts incurred when paying a nondischargeable tax debt
- Emotional distress damages that are not considered “physical injuries” or “sickness”
- Deficiencies from a repossessed vehicle or foreclosed home
- Certain kinds of business debts
Just because some of your debts are not dischargeable in Chapter 13 bankruptcy does not mean that filing is not right for you. In fact, many people who file for Chapter 13 do so precisely because they have nondischargeable debt they need help managing.