This article discusses the effect of a discharge to the person named as the "debtor" after the debtor has completed all payments under the Chapter 13 plan.
A bankruptcy discharge is a court order. Such order in a Chapter 13 grants a "discharge" to the persons named as the "debtor" in the bankruptcy petition.
Collection of Discharged Debts is Prohibited.
The discharge prohibits (makes illegal) any attempt to collect from the debtor a debt that has been discharged.
For example, a creditor must never contact a debtor by mail, phone, fax, email or otherwise to:
File or continue a lawsuit;
Attach wages or other property; or
Seek to collect a discharged debt from the debtor.
A creditor who violates this order can be required to pay damages and attorney’s fees to the debtor.
Valid Liens Survive Bankruptcy:
However, after the bankruptcy discharge, a creditor may have the right to enforce a valid lien. Example of such liens typically include a, such as a mortgage or security interest against the debtor’s property. But if the lien can be and is avoided or eliminated in the bankruptcy case, then the creditor has no lien to enforce after the bankruptcy.
Voluntary Payment of Discharged Debt is allowed.
A debtor may voluntarily pay any debt that has been discharged. However, a debtor should contact an attorney for legal advice before doing so.
A Chapter 13 discharge order eliminates a debtor's legal obligation to pay a debt that is discharged. Most, but not all, types of debts are discharged if the debt is provided for by the chapter 13 plan or is disallowed by the court pursuant to section 502 of the Bankruptcy Code.
Debts That are Not Discharged
Some of the common types of debts which are not discharged in a chapter 13 bankruptcy case are:
a. Domestic support obligations;
b. Debts for most student loans;
c. Debts for most fines, penalties, forfeitures, or criminal restitution obligations;
d. Debts for personal injuries or death caused by the debtor's operation of a motor vehicle, vessel, or aircraft while intoxicated;
e. Debts for restitution, or damages, awarded in a civil action against the debtor as a result of malicious or willful injury by the debtor that caused personal injury to an individual or the death of an individual (in a case filed on or after October 17, 2005);
f. Debts provided for under section 1322(b)(5) of the Bankruptcy Code and on which the last payment is due after the date on which the final payment under the plan was due;
g. Debts for certain consumer purchases made after the bankruptcy case was filed if prior approval by the trustee of the debtor’s incurring the debt was practicable but was not obtained;
h. Debts for certain taxes to the extent not paid in full under the plan (in a case filed on or after October 17, 2005); and
i. Certain types of debts which were not properly listed by the debtor (in a case filed on or after October 17, 2005).
This information is only a general summary of the Chapter 13 bankruptcy discharge. There are exceptions to these general rules. Because the law is complicated, you may want to consult an attorney to determine the exact effect of the discharge in this case.
For a free and confidential pre-bankruptcy consultation contact Christian bankruptcy attorney Matthew B. Tozer.
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