The Chapter 13 Discharge
What Does the Discharge Mean in a Chapter 13 Bankruptcy?
Chapter 13 bankruptcy differs from Chapter 7 bankruptcy in that it does not offer an immediate debt discharge but rather revolves around a repayment plan for your secured debts.
If your home is in danger of foreclosure, you may be able to file Chapter 13 bankruptcy and establish a three-to-five year repayment plan. Chapter 13 could allow you to keep your home as long as you stay up-to-date with current mortgage payments while catching up on past-due mortgage payments over time.
Once a Chapter 13 repayment plan has been completed, you should be eligible for a discharge if you are able to meet the following requirements:
- You have completed an approved financial management course
- You have not received a discharge in a prior case filed within a certain time frame
- Can certify that all domestic support obligations that came due prior to making the certification have been paid
The Chapter 13 discharge is designed to release you from all debts laid forth in the Chapter 13 plan. Creditors identified in the plan may no longer initiate or continue legal action once the discharge is issued.
You can learn more about the Chapter 13 discharge by reviewing your case with a bankruptcy attorney.
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Debts That May Not Be Discharged in Chapter 13 Bankruptcy
Similar to the Chapter 7 discharge, certain types of unsecured debts are not dischargeable in Chapter 13 bankruptcy, including:
- Primary home mortgages
- Certain taxes
- Most debts incurred from alimony or child support
- Most government-funded student loans
- Debts incurred from personal injury or wrongful death caused while driving under the influence of alcohol or drugs
- Debts for restitution or a criminal fine included in a debtor’s conviction sentencing
The Chapter 13 Hardship Discharge
After a Chapter 13 bankruptcy plan has been established, circumstances may arise that prevent you from completing your plan. In this instance, you may ask the court to grant a “hardship discharge.”
Generally, the following requirements must be met in order for you to receive a hardship discharge:
- Failure to complete your planned payments are due to circumstances beyond your control and are no fault of your own
- Creditors have received at least the amount they would have received through liquidation in a Chapter 7 case
- Modification of your plan is not possible
A bankruptcy attorney can further explain the details of a debt discharge in Chapter 13 bankruptcy. To connect with a bankruptcy attorney in your area, fill out the free form below: