The majority of debts discharged in Chapter 13 bankruptcy are nonpriority unsecured debts. Credit card balances, personal loans, medical bills, and utility payments fit here. Because student loans are long-term debts, you won’t have to repay them fully in your plan.

What’s the difference between Chapter 7 and 13?

With Chapter 7, those types of debts are wiped out with your filing’s court approval, which can take a few months. Under Chapter 13, you need to continue making payments on those balances throughout your court-instructed repayment plan; afterwards, the unsecured debts may be discharged.

Can I file bankruptcy and keep my car loan?

If you lease or finance a vehicle and file for bankruptcy, you can keep your vehicle as long as you are, and remain, current on your car loan or lease payments. Your car lender can, however, repossess your vehicle if you fall behind on your payments, and bankruptcy won’t stop that.

Does Chapter 13 include car loans?

In most cases, you must also pay your car loans in full through your bankruptcy plan (unless you are surrendering the cars). Another benefit of Chapter 13 bankruptcy is that it might allow you to reduce the principal balance and interest rate on your car loan through a cramdown.

Who are the unsecured creditors in a bankruptcy?

These include child support, spousal support, money you owe to employees, and tax debts. If any money is left after your priority debts are paid, it will go to your other unsecured creditors, such as credit card companies. At the end of your bankruptcy case, you might still owe certain unsecured debts.

What to do with secured debt in bankruptcy?

The simplest option is simply to give back the property. If you want to keep the property, you will have to reaffirm the debt (agree that you will still owe it after your bankruptcy is over), redeem the property (pay the creditor its fair market value), or, if the creditor agrees, keep the property and continue making payments.

What kind of debt can not be discharged in bankruptcy?

Debts that cannot be discharged in bankruptcy include child support, student loans (with some exceptions), and many types of tax debts. Unless a debt falls into a nondischargeable category, however, it will be wiped out at the end of your bankruptcy case.

What happens to unsecured credit card debt in bankruptcy?

By contrast, most credit card debt is unsecured debt. A credit card lender can’t take back the school clothes or pet supplies charged with the card if the borrower fails to make the monthly payment. Child support arrearages and unpaid gym membership fees are also unsecured debts. Learn more about secured and unsecured in bankruptcy.