You’ve filed for Chapter 13 bankruptcy. You’ve followed your three to five-year repayment plan, stuck to your budget, and are waiting to recover your debt. But then, you find out that some debts are still there.
What’s going on?
Welcome to the world of non-dischargeable debt. The debts that bankruptcy won’t erase.
What Chapter 13 does and does not cover
When you file for Chapter 13, you are entering into a repayment plan; it will not fully eliminate your debts. In other words, you make monthly payments for three to five years. If you finish the plan as required, it will erase debts like credit card balances and medical bills
However, not everything disappears. Bankruptcy does not remove certain types of debts, and you will have to pay them in full, either as part of your repayment plan or after you complete it.
Here are the most common examples of non-coverage:
- Child support and alimony: Domestic obligations that cannot be completely exhausted
- Student loans: Usually remain unless you prove “undue hardship,” which is rare
- Recent tax debts: Especially those from the last few years
- Court-ordered fines or restitution: Includes DUI penalties or damages from a lawsuit
- Debts from fraud or misconduct: Debts will stay if accumulated from dishonest behavior
Your credit card or medical bills can be eliminated only if you complete your repayment scheme. If your case is dismissed or you drop out of the payment plan, those debts remain unpaid.
The hidden debts people miss
Many people think that filing for bankruptcy will clear all their debts, but that’s not always the case. There are some debts that bankruptcy cannot erase, and they are hidden in the bankruptcy laws, unless you know what you are looking for. These responsibilities often catch people off guard because they are easy to overlook. Here’s why these hidden debts are often missed:
- Some debts are protected by law
- Individuals often mistake student loans and unpaid taxes as exempt
- Legal advice is often misunderstood
- Debt relief ads can overpromise and underdeliver
That’s why it is important to understand which debts survive bankruptcy, so you know what to expect from the start.
Know what kind of debt stays, plan ahead
Chapter 13 can give you a much-needed financial reset, but it is not a cure-all. By understanding which debts won’t go away, you can plan your repayment strategy more effectively and avoid surprises in the long run.
If you’re unsure what debts will stay on your record, talking to a bankruptcy attorney can help you figure out the fine print before it catches you off guard.
