In Chapter 13 Bankruptcy, not all debts are discharged. That said, discharge will not be necessary if you are able to repay your unsecured debt in full over the life of your bankruptcy plan. However, if your plan is set so that you will not repay all of your unsecured debts, the rest that you owe may or may not be discharged, i.e. wiped out.
Debts That Can Be Discharged in Chapter 13
In general, the balances still owed on most credit cards, attorney fees, and medical expenses will be discharged, in addition to most court judgments and loans. Also, with the new bankruptcy laws, debts owed to an ex-spouse from a divorce or separation that are not support related are discharged in Chapter 13 bankruptcy. Additionally, debts incurred for tax purposed can be discharged in Chapter 13.
Debts That Are Not Discharged
Some debts cannot be discharged in Chapter 13 bankruptcy and will still have to be paid either inside or out of your bankruptcy plan. These include:
- Debts not listed in your bankruptcy forms.
- Court-imposed fines and restitution.
- Student loans (some rare exceptions).
- Recent back taxes.
- Taxes for years in which you did not file a return.
- Debts owed due to a civil judgment from willful or malicious acts, or for personal injuries or death caused by your drunk driving.
Debts Not Discharged If Creditor Successfully Objects
Some debts will remain if the creditor files a motion in court to prove that the debt should not be discharged. An example of this is if a creditor objects due to fraudulent action on your part or recent credit card charges for luxuries. These debts will remain after your Chapter 13 bankruptcy unless you pay them off during your repayment plan.
For more information, contact the Goldbach Law Group for a free, confidential and friendly consultation.