Chapter 13 – The Discharge of Debt

Basic discharge. When the debtor completes a Chapter 13 case, the discharge eliminates all of the remaining balances owed on all general unsecured debts without priority that were provided for in the Plan. Those unsecured debts will by then already have received payment based on what the debtor could reasonably afford, provided they are paid at least as much as the creditors would have received if the debtors non exempt assets had instead been liquidated under chapter 7. Sometimes this will be payment in full, sometimes it will be a percentage of the claims, sometimes it may even be nothing (under the right circumstances).

Distinction in discharge between Chapter 7 and Chapter 13. The discharge of debts provided for under Chapter 13 is still broader than the discharge under chapter 7, but the BAPCPA amendments of 2005 have narrowed the differences considerably. With minor exceptions, debts that are nondischargeable under Chapter 7 have now been made nondischargeable under Chapter 13. The main exceptions to this are that Chapter 13 will discharge debts (other than debts in the nature of support), arising from a divorce or separation agreement, and debts arising from committing a willful or malicious injury, (unless there has already been restitution or damagesawarded in a civil action against the debtor).

By | 2017-12-07T00:02:01+00:00 October 9th, 2012|bankruptcy-faq, Financial|0 Comments

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