Understanding What Types of Debt Can Be Discharged in Chapter 13 Bankruptcy in Oklahoma
Understanding What Types of Debt Can Be Discharged in Chapter 13 Bankruptcy in Oklahoma
Filing for Chapter 13 bankruptcy in Oklahoma can offer individuals the chance to reorganize their debt and regain financial stability while keeping valuable assets like their home or car. Unlike Chapter 7, which liquidates assets to pay creditors, Chapter 13 allows debtors to repay what they owe through a court-approved plan over three to five years. Once the repayment plan is completed, certain remaining debts can be discharged (eliminated).
Debts Commonly Discharged in Chapter 13 Bankruptcy
- Unsecured Debts:
Most unsecured debts can be discharged under Chapter 13. This includes credit card debt, personal loans, medical bills, and utility bills. These types of debts typically receive only partial repayment through the plan, and the balance is forgiven once the plan ends. - Certain Older Debts and Penalties:
Some nonpriority tax debts and government penalties may also be discharged if they meet specific criteria, such as being several years old or not tied to fraudulent activity. - Lease and Contract Obligations:
If you have terminated leases or contracts—such as apartment leases or service contracts—remaining balances may be discharged once the repayment plan concludes. - Cramdown-Eligible Secured Debts:
In some cases, Chapter 13 allows for the “cramdown” of secured debts, such as reducing the amount owed on a car loan to the vehicle’s current value. While the loan is restructured rather than fully discharged, it provides significant financial relief.
Debts That Usually Cannot Be Discharged
Certain obligations remain even after completing Chapter 13, including:
- Child support and alimony
- Most student loans
- Certain tax debts
- Debts arising from fraud or malicious injury
Understanding which debts can and cannot be discharged is essential for creating a realistic repayment plan.
At Branch and Hurtt Law Firm, P.C., we can provide legal assistance to the Oklahoma City public and help determine how Chapter 13 bankruptcy could help you achieve financial relief while keeping your assets protected.
