A Chapter 13 discharge affects only those debts provided for by the plan. Any debts not provided for in the plan will remain, and the debtor will have to pay them in full, even after discharge. Additional exceptions to a Chapter 13 discharge may include: claims for spousal and child support, educational loans, drunk driving liabilities, criminal fines and restitution obligations, and certain long-term obligations (such as home mortgages or auto payments) that extend beyond the term of the plan. A lawyer at Mark T. Young & Associates in Hixson, Tennessee, can explain which debts are “erased” as a result of a Chapter 13 discharge and which will remain the obligation of the debtor.
Fraudulently Incurred Obligations
Obligations obtained by false pretenses, a false representation, actual fraud or the intentional provision of false or incomplete financial information respecting the debtor or an insider on which the creditor relied are non-dischargeable.
Unscheduled debts, or debts not disclosed in the debtor’s petition, are non-dischargeable unless the creditor had actual or constructive knowledge of the debtor’s bankruptcy.
Spousal Support And Child Support
Domestic support obligations and obligations owed to a spouse, former spouse or child as a result of divorce or separation are non-dischargeable. The term “domestic support obligation” means a debt owed to or recoverable by a spouse, former spouse or child of the debtor in the nature of alimony, maintenance or support pursuant to a separation agreement, divorce decree or property settlement agreement.
The effect of a discharge on child and spousal support obligations depends upon whether the debtor filed under Chapter 7 or Chapter 13 of the Bankruptcy Code. Whereas a Chapter 7 filing will have little effect on such obligations, a Chapter 13 proceeding may stop the collection activities, at least temporarily. The difference between chapters arises because, although all bankruptcies stop or “stay” creditors’ efforts to collect debts, the Bankruptcy Code excludes actions to collect child support or spousal maintenance from the stay unless the creditor attempts to collect from the “property of the estate,” and the different chapters of the Code define this term differently.
In a Chapter 7 proceeding, “property of the estate” includes all possessions, money and interests the debtor owns at the time he or she files. Money earned after the bankruptcy is filed, however, is not property of the estate. Since most child and spousal support is paid out of the debtor’s current income, the bankruptcy should have little effect. Under Chapter 13, however, the Code considers the debtor’s earnings as property of the estate, since the wage-earner plan is based on making payments from the debtor’s current income rather than from liquidated assets. As a result, support collections may be stayed. The court can decide to remove the stay to allow for withholding alimony and child support from the debtor’s income. Whether it does so may depend on how well the wage-earner plan provides for child and spousal support. If the court does not believe that the plan includes adequate provisions, it may decide to lift the stay.
Neither a Chapter 7 nor a Chapter 13 discharge affects post-discharge child or spousal support obligations. In other words, even at the conclusion of the bankruptcy proceeding, these on-going obligations remain.
Educational loans guaranteed by the United States government are generally not discharged by a Chapter 7 or Chapter 13 bankruptcy.
Speak With A Bankruptcy Lawyer
It is tempting to believe that a Chapter 13 discharge will leave the debtor completely debt-free, but that is not the case. Certain debts remain even after bankruptcy. An experienced bankruptcy attorney at Mark T. Young & Associates in Hixson, Tennessee, can explain the differences between dischargeable and non-dischargeable debts and paint a realistic picture of your post-bankruptcy financial situation.
DISCLAIMER: This site and any information contained herein are intended for informational purposes only and should not be construed as legal advice. Seek competent legal counsel for advice on any legal matter.
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.
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