Chapter 13 Discharge
One of the major benefits of Chapter 13 bankruptcy is the discharge of certain debts. This court order alleviates you of qualifying debts and provides you with financial peace. Of course, this financial peace comes with a catch.
You will have to pay on your debts for three to five years, depending on your payment plan and complete a debtor’s education course. However, there are circumstances where the court may grant you a hardship discharge and relieve you of the financial obligation before your plan expires.
Bankruptcy Attorney in Dallas County
The road to Chapter 13 discharge is long. You will have to endure the lengthy process, complete various courses and hope creditors do not oppose the relief. Contact Littlefield Law Firm to ensure the process goes as smooth as possible. Linda Littlefield has been helping consumers and small businesses with bankruptcy for nearly 25 years.
Littlefield Law Firm understands you are in a financial bind, which is why we offer quality representation at an affordable price. Take advantage of our free consultation and call (972) 812-0900. We are based in Dallas County but also help clients in Collin County, Kaufman County and Rockwall County.
- What is Discharge?
- Debts Eligible for Chapter 13 Discharge
- What is a Hardship Discharge?
- Additional Resources
What is Discharge?
Debt discharge is the light at the end of the tunnel for Chapter 13 bankruptcy. Once you’ve paid back priority debts or reached the end of your payment plan, certain qualifying debts will be wiped out. A bankruptcy discharge is a court order that is issued at the end of a case. This order relieves a debtor of certain debts, stripping them of the obligation to make payments. A discharge also stops debt collectors from contacting a debtor to collect payments.
Simply reaching the end of your payment plan is not the only obligation that needs to be met before your debts can be discharged. You will be required to complete a debtor education course. This course will teach you how to manage money and use credit wisely.
You must notify the court that you completed the course no later than the date of your last payment. Failing to do so may result in your debts not being discharged.
Debts Eligible for Chapter 13 Discharge
The bankruptcy court will discharge certain debts once you’ve completed your three- or five-year payment plan. Most unsecured, non-priority debts will be discharged at the end of proceedings unless the creditor can prove you used fraud to obtain the debt.
The most common types of unsecured, non-priority debts that may be discharged by Chapter 13 bankruptcy include:
- Credit card balances
- Personal loans
- Medical bills
- Utility bills
- Most lawsuit judgements
- Past non-priority income taxes
One of the benefits seen in Chapter 13 that is not seen in Chapter 7 is the discharge of certain debts. Some of the debts discharged in Chapter 13 that are ineligible for discharge in Chapter 7 include:
- Debts incurred from divorce proceedings
- Debts from willful or malicious damage to property
- Loans from retirement accounts
- Certain penalties and fines owed to the government, not including criminal fines
- Debts from a previous bankruptcy that were denied discharge
- Debts used to pay non-dischargeable tax obligations
Some debts will survive Chapter 13 bankruptcy and not be eligible for discharge, no matter your circumstance or income. Debts that will not be eliminated by Chapter 13 bankruptcy include student loans, criminal fines and restitution obligations, home mortgages, drunk driving liabilities and child and spousal support.
What is A Hardship Discharge?
Life has a way of throwing us curve balls, and the bankruptcy court understands that. You and your attorney may be able to petition the court for a hardship discharge of your debts and end your case before its termination date.
A hardship discharge is an order from the court so you and your attorney will have to file an application for this discharge. Your attorney will have to prove that something unexpected happened to you financially that reduced your income or ability to pay back creditors. This change must be beyond your control. Voluntarily quitting your job or going back to school will not be sufficient enough.
In addition to serious, ongoing change in circumstance, unsecured creditors must have already received adequate payment. Based on what has already been paid into the plan, creditors must have received at least what they would have received had you filed for Chapter 7 bankruptcy. This is a hard condition to meet unless you have little or no nonexempt property.
A hardship discharge will only discharge unsecured, non-priority debts. Even debts that are eligible for discharge will not be wiped out if the creditor objects. The majority of the time, a creditor will only object a hardship discharge if the debt was incurred from a crime such as fraud or embezzlement.
Discharge in Bankruptcy | United States Courts – Follow the link provided to learn more about Chapter 13 discharge. You can find out if a discharge can be revoked, steps you can take if a creditor tries to collect discharged debts and exceptions to debt discharge. The information can be read on the United States Courts website.
Chapter 13 | Bankruptcy Code – Gain access to the chapter over the bankruptcy code governing Chapter 13 bankruptcy by following the link. You can learn more about the repayment plan and your rights and powers as a debtor. The statute can be read on the Legal Information Institute, an online legal resource provided by Cornell Law School.
Bankruptcy Lawyer in Dallas
Are you in need of a hardship discharge? Are creditors threatening to revoke your discharge? Littlefield Law Firm is well prepared to assist with all your bankruptcy needs. Linda Littlefield is 100% dedicated to bankruptcy law. She will file forms on your behalf, represent you in court and do whatever else is necessary so you can achieve the financial freedom you deserve.
Call (972) 812-0900 to schedule a time to speak with Littlefield Law Firm. We assist clients in areas such as Dallas, Plano, Kaufman and Rockwall.