I’m considering filing a Chapter 13 bankruptcy. Do I have to include all my debts?

When you file any type of bankruptcy case, you must list all of your debts and all of your assets. In Chapter 13, however, you can often propose a plan that treats debts differently depending on the type of debt.

For example, the plan may classify a cosigned debt to be paid with interest, while paying little or nothing to other unsecured creditors. Long-term debts, such as a home mortgage, can also be treated differently than other secured debts. The plan may provide that any arrearage (back payments) be caught up through the plan, but the future payments be made by you, rather than through the plan.

What cannot be done in a Chapter 13 plan is to treat similar types of debts differently. For example, you would not be allowed to pay one particular credit card debt in full, while paying little or nothing to other credit card debts.

Many people are concerned about how a bankruptcy will affect a cosignor on a car loan or other debt. Leaving the debt out is not an option. However, In Chapter 13, there is a “codebtor stay” which prevents a creditor from trying to collect from a codebtor while the debt is being paid through the plan. This gives you an opportunity to pay the debt under the protection of the Court without having to worry that the codebtor will be sued, garnished or harassed about the debt.

An experienced bankruptcy attorney will go over all of your debts, and discuss with you how they would be treated in the plan. If you are considering bankruptcy, it is critical that you get advice from a qualified and experienced attorney. Bankruptcy is a complicated and specialized area of the law. Don’t settle for vague or uncertain answers to your questions.

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