Can I File for Bankruptcy on Restitution?
Facing overwhelming debt may lead you to file for bankruptcy. Bankruptcy allows consumers a legal means to either clear out debt or to reduce the amount of debt required to be repaid. While bankruptcy can lead to a new financial future and can relieve the stresses caused by overwhelming debt, there are some debts that cannot be discharged in a bankruptcy case.
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Bankruptcy Attorney
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Filing for bankruptcy to avoid restitution, which is a court-ordered payment to someone because of the results of a criminal or civil trial, should be proceeded with extreme caution. Restitution is not a dischargeable debt and cannot be reduced or eliminated in bankruptcy. A bankruptcy attorney needs to be consulted to help determine if filing bankruptcy is still beneficial in your circumstances. A bankruptcy attorney can explain the laws in detail and review your personal situation to see if there is any help available for your situation.
Nondischargeable Debt
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There are a few types of debt that the bankruptcy court will not discharge nor reduce. Unpaid child support, criminal restitution, unpaid student loans and many tax debts cannot be discharged. These debts are protected by federal law to ensure that the person entitled to payment will be paid.
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Chapter 13 Bankruptcy
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Chapter 13 bankruptcy might be able to put criminal restitution on a payment plan, however, it will not reduce the total amount owed. Any amount of criminal restitution not repaid by the end of the Chapter 13 payment plan, will still be owed to the court or agency that ordered the restitution. A bankruptcy attorney can help you come up with a repayment plan that works with your financial situation. The average Chapter 13 repayment plan is three to five years.
Chapter 7 Bankruptcy
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A Chapter 7 bankruptcy will not have any impact on restitution. Any payments due will continue to be due. A Chapter 7 bankruptcy cannot reduce payments or eliminate the debt. However, it will discharge other debts that can allow you to dedicate your disposable income to the restitution.
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