Bankruptcy – Chapter 13 – Discharge of Debts

Bankruptcy – Chapter 13 – Discharge of Debts

BANKRUPTCY: Chapter 13 – Discharge of Debts:

Q: What debts are discharged in a Chapter 7 Bankruptcy?

A. Upon successfully making all of your payments under a Chapter 13 Plan, you will receive a discharge from most of your debts. Basically, a discharge is the release of the debtor from the personal liability for the repayment of a debt. It does not release the debtor’s property from the claim or right to possession of a valid security interest, lien or mortgage held by a creditor. Most common unsecured debts (credit card debt, medical bills, past due rent, personal loans, etc.) are discharged. The personal liability for repayment of most secured debts is discharged (but, again, not the lien or security interest in the property). Now, read “What debts are not discharged”.

Q: What debts are not discharged in a Chapter 7 Bankruptcy?

A. There are two primary classifications of debts which are not discharged in a bankruptcy case. First, debts which are not discharged, and the creditor does not have to do anything to protect its interest. Second, debts which are discharged unless the creditor takes action(s) in the bankruptcy case to assert that the debt should not be discharged.

i. Non-dischargeable Debts (Automatically are not discharged). The most common of these types of debts are child support and other domestic support obligations, student loans, and taxes for recent years. Debts which are not listed in the bankruptcy documents are also not discharged. (Note: You should consult an attorney concerning the potential for the discharge of tax debts.)

ii. Debts that are discharged unless the creditor takes Court action. If the creditor is notified, and does nothing, then the debt is included in the discharge of the debtor. The most common of these types of debt are debts from your fraudulent actions of debts from recent credit card charges for luxuries.

Q. Are there debts discharge in a Chapter 13 case that are not discharged in a Chapter 7 case?

A. YES. Some debts cannot be discharged in a Chapter 7 proceeding but can be discharged in a Chapter 13 case. Examples would include non-support debts owed to an ex-spouse under a divorce agreement, and debts incurred to pay taxes.

Q: What is a “secured” debt?

A. A secured debt is a debt whose repayment is secured by a lien, claim or charge against property owned by the debtor. The lien, claim or charge may have arisen by agreement with the lender (examples: mortgage on your home, car title loan, purchase money security interest, etc.), or it may have been claimed involuntarily by the creditor pursuant to enforcement of a legal right (tax lien, mechanic’s lien, judgment lien, etc.). Basically, if you do not pay, the creditor can take the property to satisfy its lien.

Q: What is an “unsecured” debt?

A. An unsecured debt is any debt whose repayment is based only on debtor’s personal promise to repay. In bankruptcy, there are two primary types of unsecured debt. General unsecured debts are the most common, and usually arise from personal loans, credit cards, medical expenses, unpaid rent, claims for damages to person or property, student loans, and similar indebtedness. Priority unsecured debts are debts that are given special treatment in bankruptcy because of the nature of the debt. Typical examples of priority debts are tax debts, domestic support obligations, and some debts owed to

Q. What is a priority debt or a priority unsecured debt?

A. Priority or priority unsecured debt is basically the same thing. There are debts which the bankruptcy law says must be treated in a special manner in bankruptcy proceedings even though they are not secured by any asset. Typical examples would be taxes for recent years and back child support . In a Chapter 13 these debts must be generally be paid in full during the term of the Plan.

Contacting the Right Attorney: Bankruptcy can be a complicated matter. The responses to these Frequently Asked Questions are general in nature, and are not intended to provide legal advice for specific cases. A consultation with a Georgia bankruptcy attorney can provide you with the information you need to determine which option best addresses your circumstances. As a solo practitioner, I am able to give more time and personalized attention to my clients. I will personally communicate with creditors or banks to resolve your issues. Your case will never be handed down to a legal assistant or other staff member.

NOTICE: The services or benefits offered are bankruptcy relief under the provisions of the U.S. Bankruptcy Code. We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.

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