Non-downloadable debt cannot be resolved through bankruptcy and includes student loans, tuition, and alimony. Chapter 7 allows termination of non-bad debt, while Chapter 13 involves a repayment plan. Student loans and alimony must be repaid, while taxes are dischargeable under Chapter 13 but not Chapter 7. Reductions in non-repayable debts are possible through a lawyer. Debtors should list all debts for release and cannot pay off old bills from previous bankruptcies.
Non-downloadable debt is money owed by a consumer that cannot be resolved through a bankruptcy process. This type of debt varies in bankruptcy courts based on your choice of filing, chapter 7 or 13. The main types of non-repayable debt are student loans, tuition, and alimony; While these debts cannot be paid off, it is possible to have the balances reduced through a bankruptcy attorney. Consumers should also note that any debts not listed in an official bankruptcy filing will have to be repaid as determined by the creditor.
Chapter 7 bankruptcy allows a debtor to terminate all bills that do not fall into the bad debt type; however, there are multiple bad debt rules that apply to this filing choice. In contrast, Chapter 13 bankruptcy involves creating a repayment plan to creditors for all or part of the debt. As a result of the repayment process, less debt is considered non-collectable, such as back taxes.
Both bankruptcy chapters require debtors to repay student loans. The government does not want these loans to default as needy prospective students will be adversely affected if funds are lost to the bankruptcy system. Also, alimony cannot be paid since it is a debt that has already been adjudicated in court to be directed to an ex-spouse. The taxes, while dischargeable under chapter 13, are non-rechargeable debts under chapter 7, so the government does not lose this supply of funds.
It is possible to reduce some non-repayable debts through the assistance of a lawyer. For example, some debts, especially taxes, can be extremely large and impractical to repay in a reasonable amount of time. In response, the court system allows for reductions in some cases. The judge will decide on a reasonable repayment amount once it is conferred with the creditor. Many government entities understand that debt relief can encourage timely payments on a consistent basis, rather than spending excessive money to collect a defaulted bill.
A debtor should read his court papers carefully before filing for bankruptcy. Any debts not listed for release will have to be repaid as directed by the creditors. Because consumers may file for bankruptcy multiple times in their lives, some debtors may attempt to pay off a debt incurred prior to a previous bankruptcy. Debtors cannot pay off old bills this way as the previous debt is now considered non-repayable; the court will see this discrepancy, which can negatively impact your current bankruptcy proceedings.
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