What Is the Chapter 13 Discharge?
Under rules of Chapter 13 bankruptcy, you will be entitled to discharge your debt after completing all payments, according to your approved payment plan. Depending upon your level of income, the payment plan will typically be three or five years. Before your debt may be discharged by the U.S. Bankruptcy Court, however, you will be required to certify three things:
- All obligations for domestic support obligations have been paid. This includes child support and spousal support that may have been a requirement of your divorce judgment.
- You have not had debt discharged in a previous Chapter 13 filing, within the previous two years; or a previous Chapter 7 filing, within the previous four years.
- You have completed a certified course in financial management.
Upon discharge of the debt, you will be released from all debts included in the plan. Some limited exceptions may apply. Creditors may not pursue any further legal action to collect on the debt.
U.S. bankruptcy rules allow for some notable exceptions to debt that may be discharged. These include:
- Child support and spousal support arrears
- Student loan debt
- Debts from a personal injury judgment resulting from DWI or other willful, malicious acts
- Restitution and debt resulting from a criminal offense
The court realizes that bad things happen in people's lives. Often, individuals and families repaying debt under Chapter 13 run into a hardship that precludes them from completing the plan. The debtor may petition the court for a hardship discharge. The court may approve a hardship discharge under the following conditions:
- Failure to complete your plan is due to circumstances beyond your control
- Your creditors have received as much in payments over the course of the plan as they would have received if you had liquidated your assets under Chapter 7
- You suffered a debilitating injury or illness that permanently eliminates disposable income necessary for payments
Do not file for Chapter 13 bankruptcy expecting to receive a hardship discharge of your obligations. The courts are reluctant to accept even a modified plan to reduce or extend your payments.
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Learn more about debt discharge under Chapter 13 bankruptcy. Contact a Chapter 13 bankruptcy attorney at The Golden Law Group to schedule a free initial consultation. Offices are conveniently located in Brandon, Tampa and Bradenton, Florida. The firm represents clients in communities throughout Manatee County, Hillsborough County and Saratoga County, Florida.