Bankruptcy in Pennsylvania, Part 4
Continued from Bankruptcy in Pennsylvania, Part 3
Some debt can not be discharged
Some debt simply can not be discharged, regardless of the chapter of the code under which the petition is filed. That being said, Chapter 13 is less restrictive than other chapters available to individuals. The good news is the debt does not have to be addressed until after the discharge; however, this happens quickly in a Chapter 7 case, comparatively speakingwithin a few months after the original petition is filed. Compared to Chapter 13, often referred to as the wage earners plan, the few months wait fairly flies byChapter 13 cases are set up on either a three-year or five-year schedule.
According to the U.S. Court's page on discharges, "There are 19 categories of debt excepted from discharge under chapters 7, 11, and 12. A more limited list of exceptions applies to cases under chapter 13." The court also explains that "A slightly broader discharge of debts is available to a debtor in a chapter 13 case than in a chapter 7 case. Debts dischargeable in a chapter 13, but not in chapter 7, include debts for willful and malicious injury to property, debts incurred to pay non-dischargeable tax obligations, and debts arising from property settlements in divorce or separation proceedings. Although a chapter 13 debtor generally receives a discharge only after completing all payments required by the court-approved (i.e., "confirmed") repayment plan, there are some limited circumstances under which the debtor may request the court to grant a "hardship discharge" even though the debtor has failed to complete plan payments. Such a discharge is available only to a debtor whose failure to complete plan payments is due to circumstances beyond the debtor's control."
Advantages of Chapter 13 over Chapter 7
As Ive written before (these criteria dont vary from state to state, generally speaking):
In addition to the benefits of Chapter 7, you can:
- keep property that is secured by a lien by paying for it through the Chapter 13 plan. This can save a home from foreclosure, or stop repossession of a car;
- stop evictions, if filed before the 5 day notice or other lease termination expires and if you can pay the back rent owed through the Chapter 13 plan. If you cannot repay all of your debts, but have made the best effort to pay that you can, you can get a discharge of the balance left on your debts, although you cannot remove a lien unless you have paid it off through the plan;
- discharge all debts, except alimony, child support, criminal fines and restitution, damages to individuals caused by drunk driving or intentional torts, money owed due to fraud, theft or embezzlement, most taxes and long term debts, such as mortgages. Student loans are not discharged unless denying a discharge would cause an undue hardship to the debtor.
Special rules for Chapter 13
If you fall behind on your payments, the payments can be deducted directly from your paycheck. While you are in Chapter 13 you cannot get new credit without the trustees approval.
There are also limits the the amount of debt you can have and still be eligible for Chapter 13. A debtor cannot have secured debts over $1,081,400 or unsecured debts over $360,475. However, Chapter 11 is available for debtors who exceed these limits.
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