There are several different types of bankruptcy that a consumer can use to get debt relief. One such type is Chapter 13 bankruptcy. This is a kind of debt repayment plan available to consumers with less than $385,175 in unsecured debts and less than $1,149,525 in secured debts. Once a debtor completes all of the payments under a Chapter 13, he or she may be entitled to a discharge of remaining debts.
A discharge will generally release a debtor from all debts provided for by the Chapter 13 debt repayment plan. Therefore, creditors can no longer take legal action against the debtor to collect on a debt that has been discharged in bankruptcy.
There are several different types of bankruptcy that a consumer can use to get debt relief. One such type is Chapter 13 bankruptcy. This is a kind of debt repayment plan available to consumers with less than $385,175 in unsecured debts and less than $1,149,525 in secured debts. Once a debtor completes all of the payments under a Chapter 13, he or she may be entitled to a discharge of remaining debts.
A discharge will generally release a debtor from all debts provided for by the Chapter 13 debt repayment plan. Therefore, creditors can no longer take legal action against the debtor to collect on a debt that has been discharged in bankruptcy.
Before this can go into effect, the debtor must meet certain requirements. The filer must certify that all domestic support obligations are met; the filer must not have received a discharge in another case within two years of the current Chapter 13 filing; and the filer must have completed an approved course in financial management.
There are some debts that cannot be discharged with this form of bankruptcy. Home mortgages, certain types of taxes, debts from alimony or child support and student loans generally cannot be discharged in bankruptcy.
As with other forms of bankruptcy, the laws concerning Chapter 13 are very complex. A debtor should seek competent legal counsel before attempting to file for personal bankruptcy. Every debtor that files for bankruptcy should be clear about the scope of the debt discharge and what will happen after the bankruptcy is completed.
Source: United States Courts, “Chapter 13 – Individual Debt Adjustment,” accessed Oct. 9, 2014