If you file for bankruptcy under Chapter 13, there are certain debts that will be released by a discharge. Many people who are going through bankruptcy tend to think that all debts will be released once they file for Chapter 13 bankruptcy, but that’s not how it works.
Today, our Salt Lake City Chapter 13 bankruptcy attorney Justin M. Myers is going to explain what debts are released by a Chapter 13 discharge and which are unaffected by your bankruptcy filing.
What is a Chapter 13 discharge?
But before we get started, let’s get something out of the way: let’s define the term “Chapter 13 discharge.” What it means is basically a formal order by court that releases you (the debtor) from all dischargeable debts, and orders your creditors to stop harassing you and trying to collect the debts from you.
Once your debts have been discharged under Chapter 13 bankruptcy, you no longer have to pay these debts. Chapter 13 discharges fall into two categories:
- Discharge granted to a debtor upon completion of all payments under the Chapter 13 plan; and
- Discharge granted to a debtor who is unable to complete his/her plan payments due to circumstances he/she is not at fault for and has no control over (aka the chapter 13 hardship discharge).
Do note, however, that the first type of a Chapter 13 plan discharge releases a debtor from more debts than the other type.
What debts are not discharged under Chapter 13 bankruptcy?
Typically, these debts will not be discharged after you file for bankruptcy under a Chapter 13 plan:
- Debts that are repaid outside of the bankruptcy plan
- Debts relating to alimony, child support, or maintenance
- Installment debts that are due after the completion of payments under the plan
- New debts incurred when the bankruptcy plan was already in place
- Student loans
- Debts for most government funded or guaranteed educational loans
- Debts arising from wrongful death or personal injury caused by the debtor while driving under the influence of drugs or alcohol; and
- Debts for restitution or a criminal fine from a sentence on the debtor’s conviction of a crime.
What debts shouldn’t be paid in full under a Chapter 13 plan?
Under a Chapter 13 bankruptcy plan, you can pay off any debt, both secured or unsecured. In fact, our Salt Lake City Chapter 13 bankruptcy lawyer says that even nondischargeable debts may be paid under the plan, including but not limited to child support, alimony, and student loans.
Many people were misguided to think that all debts must be paid in full if they file for bankruptcy under a Chapter 13 plan. That’s simply not true. Generally, certain debts such as those relating to taxes and fully secured debts must be completely paid off. But the vast majority of debts can be paid off only in the amount that you can reasonably afford.
In fact, if your Chapter 13 plan is nearing its completion, the unpaid balance of some debts may be discharged, our best bankruptcy attorneys in Salt Lake City say. Whatever is the case, it’s important to speak to a bankruptcy lawyer to find out what debts will and will not be discharged after you file for Chapter 13 bankruptcy.
Get a free consultation by contacting the offices of JMM Legal. Call at 1-801-505-9679 or complete this contact form.