Filing for Chapter 13 bankruptcy can be a lifeline for individuals in Connecticut who are struggling with overwhelming debt but have a regular income. Unlike Chapter 7, which liquidates non-exempt assets, Chapter 13 allows debtors to reorganize their finances and repay a portion of their debts over a 3- to 5-year period. At Grafstein & Arcaro, LLC, we help clients navigate this process and understand which debts can ultimately be discharged at the end of their repayment plan.

What Is Chapter 13 Bankruptcy?

Chapter 13 bankruptcy, often referred to as a “wage earner’s plan,” allows individuals to restructure their debts while protecting assets like a home or car from foreclosure or repossession. Once the repayment plan is successfully completed, certain debts may be wiped out (discharged), offering the filer a fresh financial start.

Types of Debts That Can Be Discharged

The types of debts that may be discharged in Chapter 13 include both secured and unsecured obligations, though not all debts qualify for discharge. Here's a breakdown:

1. Credit Card Debt

Unsecured debts like credit card balances are commonly discharged in Chapter 13 bankruptcy. This includes any late fees or interest accrued before the filing.

2. Medical Bills

Medical expenses, which often cause financial strain, are typically dischargeable under Chapter 13 as unsecured debts.

3. Personal Loans

Most personal loans—whether from financial institutions or family and friends—are unsecured and may be eliminated after the repayment plan is completed.

4. Utility Bills

Unpaid utility bills incurred before the bankruptcy filing can often be included in the discharge.

5. Certain Legal Judgments

Some court judgments, such as those from civil lawsuits, may be dischargeable, depending on the nature of the case.

6. Older Tax Debts

Under specific conditions, some income tax debts may be discharged, especially if they are more than three years old and meet other IRS criteria.

Debts That Are Typically Not Discharged

It’s important to understand which debts cannot be wiped out in Chapter 13 bankruptcy:

• Student loans (except in rare cases of undue hardship)
• Domestic support obligations like child support and alimony
• Most recent tax debts
• Debts incurred through fraud or willful injury to another
• Debts for personal injury or death caused by DUI

However, even if these debts are not discharged, Chapter 13 can help make them more manageable by allowing you to repay them over time without interest or penalties in some cases.

The Benefits of Chapter 13 in Connecticut

In addition to debt discharge, Chapter 13 offers significant benefits to Connecticut residents:

• Stops foreclosure and allows homeowners to catch up on missed mortgage payments
• Protects co-signers from collection efforts
• Prevents wage garnishments and collection lawsuits

At Grafstein & Arcaro, LLC, we’re committed to helping you understand your options and make informed decisions during financially challenging times.

Get Legal Guidance Today

Every financial situation is unique. If you're considering Chapter 13 bankruptcy in Connecticut and want to understand which debts may be discharged in your case, contact Grafstein & Arcaro, LLC today. We are here to provide the legal assistance and peace of mind you need to move forward.