Debts Discharged at the End of Chapter 13 Bankruptcy
When a debtor completes his Chapter 13 debt consolidation plan, most if not all of the debts are eliminated by way of a discharge. In fact, a Chapter 13 discharge is far broader in its scope than a Chapter 7 discharge because it eliminates debts that would be non-dischargeable in a Chapter 7 bankruptcy.
A Chapter 13 discharge is accomplished after a debtor has made all of the payments through the Chapter 13 debt consolidation plan. As previously mentioned a Chapter 13 debt consolidation plan is paid out over a period of three to five years. You must make all of your payments to receive your discharge. Of course, your payment amount depends upon your debts as well as your income and your expenses. Certain priority debts must be paid in full or else these debts will not be discharged as your other debts will be.
Most debts that our Montgomery bankruptcy lawyers encounter in a Chapter 13 debt consolidation plan are non-priority, unsecured debts. These debts are generally completely eliminated through the Chapter 13 discharge. Most Chapter 13 filers have some amount of credit card debt. This is a non-priority unsecured debt which will likely be completely eliminated through your Chapter 13 repayment plan. If it is not completely eliminated, the debt may be proportionally paid or paid in full. The same is true for medical bills. Medical debt is one of the main reasons people file for bankruptcy relief. Similar to credit card debt, personal loans also get discharged at the end of your Chapter 13 plan. Personal loans are generally debts that are obtained from small loans or payday loan places. These loans are discharged as long as there is not a piece of collateral that is attached to the loan.
Most income tax obligations are non-dischargeable priority debts; however some taxes such as older income tax obligations may be considered unsecured debt and can be discharged at the completion of your Chapter 13 case. There are restrictions on what on which income tax obligations are considered unsecured debt. Generally your tax returns must be filed timely, and you must not commit any fraud in the filing of these tax return.
Other debts that can be discharged are debts that are related to a breach of contract or negligence action in which a judgment was obtained against you. If you've been sued for failure to pay a debt, and a judgment was obtained these can be discharged if you do not have enough property to secure the lien or judgement. The same is true if you are sued for a car wreck in which you were negligent. If the lawsuit resulted in a judgment against you, these debts can also be discharged through your Chapter 13 debt consolidation plan
There are certain debts which cannot be discharged through a Chapter 13 debt consolidation plan. First any debt that is a result of a willful or malicious action can’t be discharged. Generally, if you injured someone in a car wreck due to a DUI or reckless driving, then these debts cannot be discharged. This judgment will remain against you. If you fraudulently filed your taxes or willfully failed to file your taxes, then these past tax debts cannot be discharged. The debt will remain against you even after you've completed your Chapter 13 plan. Finally domestic support obligations such as child support or alimony cannot be discharged through your Chapter 13 plan; however, you can repay the alimony or child support through the Chapter 13 debt consolidation payments that you make.
Which debts are considered domestic support obligations can be tricky and should be discussed with our Montgomery bankruptcy attorneys.
If you have questions, please call The Sellers Law Firm. All consultations are always free, and we can usually see you within 24 hours. We have offices located in Montgomery, Selma, Greenville, and Troy. Call us at 334-LAWYERS (529-9377) to set an appointment or use the “text us” link or Contact Form on our website. Remember that doing nothing changes nothing so act today!