One of the options available to Ohio debtors who cannot obtain relief from their financial obligations through other methods is filing for Chapter 13, assuming the eligibility requirements are met. While a successful completion of the plan will result in the discharge of most debts that remain unpaid, some obligations are not eligible for discharge. These include criminal fines and compensation obligations, liabilities for drunk driving and debts not covered by the court-approved plan. However, two of the biggest debt concerns for some individuals are student loans and payments for alimony and child support.
Debt discharged through Chapter 13 bankruptcy does not generally include student loans. However, those could be discharged if the courts determine that repaying the loans will cause the debtors and their dependents undue hardship. Debtors must apply for the discharge of student loans before they are granted the discharge of their other qualified debts.
The courts consider three factors to determine whether debtors will suffer undue hardship. The first is the inability to support the minimum standard of living if the debtors repay the loans. Second, those financial circumstances must be expected to last for a substantial period of the repayment. Finally, the debtors must have made a decent effort to repay their student loans before the bankruptcy.
Chapter 13 discharge does not relieve individuals from alimony and child support, but the courts might order that the collection of payments stop for at least a temporary period of time. Under this type of bankruptcy, the debtors' earnings are considered property of the estate because the Chapter 13 plans are based on repaying debt with current income instead of liquidated assets. It is due to this that financial support could be stayed.
One requirement for Chapter 13 is that the debtor have a regular income. For those who qualify, this method can be an effective form of debt relief. A bankruptcy attorney can explain the other eligibility requirements associated with Chapter 13.