April 15th is tax day, and believe it or not, that may be good news if you owe old tax debt and are considering filing bankruptcy. Contrary to popular belief, some old tax debt can be wiped out (“discharged”) in a Chapter 7, or paid a mere percentage in an appropriate Chapter 13. Tax debts become dischargeable in bankruptcy if, and only if, all of the following are true: Read more “You may be able to discharge your old tax debt!”
Chapter 7 and Chapter 13 are different tools that are used to handle different financial problems. Chapter 13 is a debt consolidation plan used to repay debt in full or in part over a period of years. Chapter 7 is a fresh start or liquidation case that is usually finished after only a few months.
In Chapter 13, you can force secured creditors like mortgage lenders or car lenders to allow you to cure defaults over time, whether they agree or not. In Chapter 7, unsecured debts are discharged without payment, and you indicate your preference (intent) as to whether or not you want to “reaffirm” and keep paying your secured creditors. Alternatively, you may surrender the collateral and discharge the debt.