If you are struggling to pay your bills, it may be possible to file for a reorganization bankruptcy. When you file, you will be required to present a repayment plan to a Florida judge and agree to abide by that plan for up to five years. At the end of a Chapter 13 proceeding, some or all of your debts may be discharged.
How debts are reorganized in a Chapter 13 case
Outstanding debt balances are referred to as priority, secured or unsecured. Priority debts such as income taxes owed or child support payments must generally be paid in full. Secured debts include a mortgage, auto loan or any other balance that is secured by collateral, and these debts must typically be repaid in full during a Chapter 13 proceeding.
Any income that is left over after paying basic expenses must go toward unsecured debts such as medical bills or credit card balances. Any unsecured balances that remain at the end of the repayment period will likely be discharged.
Not all debts can be discharged
Income and certain business taxes are typically exempt from being discharged at the conclusion of a Chapter 13 case. Furthermore, most private and federal student loan balances will remain intact after your case is discharged. It is important to note that a discharge will not be granted until after you prove that you are current on alimony and child support payments.
If you’re interested in obtaining debt relief without necessarily giving up your assets, it might be worth filing for Chapter 13 bankruptcy. An attorney may be able to help you learn more about the process of doing so and determine whether you qualify. Legal counsel may also talk about the automatic stay and how it could apply in your case.