What is a Chapter 13 Discharge?

Unlike a Chapter 7, a Chapter 13 debtor submits a plan of reorganization to the court.  This plan is created by the debtor to establish a schedule of repayment to the debtor's creditors. Once the court approves this plan, it is legally binding for the debtor and creditors.  Under Chapter 13 reorganization, a debtor typically receives a judgment of discharge once he/she has completed all payments under the plan of reorganization and satisfied all requirements. 

Obtaining an order of discharge is vital to the Chapter 13 debtor.  A discharge means that a debtor is no longer legally responsible for the debt.  If a debt has been "discharged", the debtor is free and clear of any financial liability and creditors are prohibited from attempting to collect on a discharged debt.  Prohibited debt collection activity includes phone calls, letters and lawsuits.  Once the debt has been discharged it no longer exists as a matter of law.

Repaying the established payment schedule under the plan of reorganization is only one step in the quest for a Chapter 13 discharge.  A debtor must complete an approved financial management course.  Further, if a debtor has received a prior Chapter 13 discharge within the previous two years, or a Chapter 7 discharge within the previous four years, that debtor is ineligible for a discharge.  In addition, a trustee will look to ensure that any applicable domestic support obligations that came due prior to the discharge were paid timely.

Once a Chapter 13 debtor can certify the authenticity of the above statements, a discharge will be issued.  Unlike in Chapter 7, there are very few exceptions to a Chapter 13 discharge.  An order of discharge frees the debtor from any debts included in the plan of reorganization or disallowed. 

As you can see, a Chapter 13 filing has many steps and requirements.  An experienced Fears | Nachawati bankruptcy attorney is ready and willing to handle your Chapter 13 needs.