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Debt discharges and Chapter 13 bankruptcy

On Behalf of | Apr 13, 2022 | bankruptcy |

Chapter 13 bankruptcy differs significantly from Chapter 7. With Chapter 7, filers enter into a liquidation bankruptcy, which mainly involves the trustee selling off non-exempt assets to pay creditors. Some remaining debt becomes subject to discharge. Chapter 13 focuses on a repayment plan, but some filers may wonder if any debt undergoes a discharge. For those with such concerns, it might be positive news to learn that some debt may end up discharged in a Maryland federal bankruptcy court.

Repayment plans and Chapter 13 bankruptcy

A repayment plan approved by the court serves as the basis for a Chapter 13 filing. The debtor must provide proof of all assets, liabilities, income, living expenses, and more. The court follows federal law and all statutes that establish eligibility. Those who meet the requirements and provide sufficient documentation may receive a payment plan approval.

Persons buried under debt may hope for more than an agreeable creditor repayment plan. They might wish the court discharges some of their debt. Such an outcome is possible after the debtor makes good on the payment plan arrangement.

Debt discharges and Chapter 13 bankruptcy

Chapter 13 bankruptcy generally provides repayment plan durations of three to five years. Once the debtor successfully completes the process, most remaining unsecured debts become discharged. However, secured debt would not face any discharges. A motorcycle loan would be one example of a secured debt.

Priority debts do not receive a discharge, either. Alimony and certain tax debts would fall under the umbrella of priority debts. Regardless, successfully completing the bankruptcy process could give a debtor a fresh new financial start.

Defaults on the payment plan could prove disastrous, though. The court could end the bankruptcy process, reopening doors for creditors to collect full payment.



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