Dischargeable Debts under Chapter 13

On completion of all the payments prescribed under the Chapter 13 plan a debtor is entitled to be discharged. However, there are certain debts that will not be discharged. Obviously, debts that were not included in the plan will not be affected by the discharge, and will remain outstanding. Priority debts such as bankruptcy fees will also need to be paid. Aside from these, other debts that survive the discharge can include long term obligations such as home mortgages, the majority of educational loans, child support payments & alimony, personal injury payments owing because of a death caused by driving under the influence of alcohol or drugs, or fines payable for criminal convictions.

An individual needs to be very careful in the months prior to filing Chapter 13. If it is discovered that they have obtained credit to buy a luxury item within 90 days of filing, or received a loan or other cash advance within 70 days of filing, these will not be classed as dischargeable debts under the bankruptcy.

Dishonesty

It is also important to note that in the event that the debtor does not file tax returns or files fraudulent tax returns, any resultant tax owed is not dischargeable. This also applies to money obtained by the debtor under false pretenses and money acquired as a result of embezzlement.

 

Debts that are incurred as damages awarded after a civil action for causing malicious personal injury or death are usually dischargeable under Chapter 13. However there is an exception to this: if the creditor objects to the discharge, they can apply to the court to have the debt made non-dischargeable.

Partial Discharge

If a debtor cannot complete the payments under their plan because of circumstances outside their control, they may be granted a partial discharge. In the event that this occurs, the debts that will survive the partial discharge will include debts that were not in the plan, secured debts, debts repayable by installments that survive the duration of the plan and debts incurred during the time the plan was in effect.

Hardship Discharge

Once a plan is confirmed, a situation may arise in which the debtor is unable to make all the repayments set out under the plan. If this happens, the debtor can apply to the court for a “hardship discharge.” However, there are certain requirements: it must not be possibly to alter the plan to reflect the change in circumstances; the circumstances that led to the debtor not being able to make the repayments must not be of their own making; and the creditors must have received a minimum amount comparable to that which they would obtain under chapter 7.

If you are thinking about filing bankruptcy, consult with a bankruptcy attorney near you to find out what type of bankruptcy is best for you.
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