Chapter 13 is an excellent form of debt relief. It offers those with sufficient income the opportunity to discharge many kinds of debt after completing a court-approved repayment plan. While the debtor does sacrifice many financial privileges for a period of time, it is usually not necessary to forfeit one's home or other property while undergoing a Chapter 13 bankruptcy.
It is important to understand that Chapter 13 does not assess all types of debt equally and may not offer the discharges debtor seeks, depending on the nature of the debts in question. Some debts are known as priority claims. These may not be eligible for discharge, depending on the circumstances. They may, however, qualify for easier repayment terms under your repayment plan.
Priority claims may include several types of debt, such as:
- Debts related to personal injury or wrongful death claims arising from intoxication on the part of the debtor
- Certain kinds of tax debt
- Debts owed on payroll or employee benefits
- Spousal support debt
- Child support debt
Other, more specific types of debt may also qualify as priority claims a well.
Priority claims can create serious complications, but those who face them may still have more flexibility under Chapter 13 than they expect. If you hope to use a Chapter 13 repayment plan, it is wise to make sure that you fully understand exactly how it may apply to your circumstances.
Even if you carry one or more priority claims, you may still find that Chapter 13 bankruptcy is a good fit. An experienced bankruptcy attorney can help you assess your needs and the options you have under the law. That can lead to crafting an individual strategy that addresses your priorities and protects you rights.